Here are five ways orthopedic surgeons can add to their revenue stream.
1. Invest in a surgery center or office building. With declining reimbursement rates, physicians have to figure out how to generate additional income, says Pedro Vergne-Marini, MD, managing member of Physicians Capital Investments. One way to do that is by investing in real estate, such as an office building or an ASC. Surgeons working out of surgery centers have the potential to receive a higher percentage of the reimbursement from the cases they perform. "Every time a patient is admitted to a hospital, the bill generally is two to three times higher than it would be in the ASC. Furthermore, the physician doesn't receive the additional compensation," he says. "A procedure that would cost $1,800 in an ASC, the hospitals might charge $6,000 or higher per patient. Physicians operating in ASCs will make a higher profit while at the same time will improve the quality of care and decrease the overall cost of healthcare."
For younger physicians partnering to invest in a surgery center, it makes more sense to purchase the property instead of leasing. This is a relatively safe way to increase your net worth and to compliment a retirement plan. "When it is a physician occupied building, you can get some pretty decent loans from small businesses and the bank," he says. "When you own the building, your property will have value. You are paying with pretax dollars and doing something for protection at the same time. You can also depreciate the building so you get an additional tax benefit by doing so."
2. Add imaging services to your existing practice. More and more orthopedic practices are offering on-site imaging services, including MRIs. The most common arrangement orthopedic practices seem to use for this service is purchasing an MRI and then using a telaradiology service to interpret the images. In this scenario, the practice bills for the technical component of the MRI services while the radiology company bills for the professional fee. John Davis, MBA, principal of Medical Practice Consulting, a medical practice consulting firm based in Bantam, Conn., says this arrangement is the "safest and cleanest" due to payor concerns about who is qualified to provide imaging care. The investment required to offer MRI services in-office range from $250,000-$1 million, and savings can be found by purchasing used or refurbished equipment, which is readily available, says Mr. Davis. The cost of a new, high-quality open MRI will likely run practices between $750,000-$1 million, says Mr. Martin.
In order to determine if an MRI is a wise investment, practices should project their volume based on past MRI referrals and then determine likely payor mix as payments vary widely by payor, says Mr. Davis. For example, Medicare typically pays $350-$500 for an MRI facility fee while a private payor may pay significantly more. Mr. Davis also suggests that if orthopedic practices decide to purchase an MRI, they purchase an open MRI as opposed to one designed for extremities only. "My personal thinking is that if you're going to go there, go all the way," he says. "An extremity MRI can't be used on someone's back or hip. These can't be done correctly without a full body MRI."
3. Hire physical therapists at your practice. Adding physical therapy often increases the practice's profits and expands the continuum of care for patients. Physical therapists can also be used as physician extenders to help with office responsibilities. "If you are going to add ancillary services, you need to look beyond the fact that they are going to increase your revenues," said Mr. Blom. "You have to see it as something that is going to be part of your practice." Orthopedic practices have the option of partnering with rehabilitation and physical therapy organizations to provide physical therapy, but Mr. Blom recommends hiring the professionals on as part of the practice's staff.
"When you have your own employees, it's easier to do program development and risk management," says Mr. Blom. "You have to have a lot of faith in the other organization to do things right 100 percent of the time." Additionally, high turnover rates for physical therapists and differing goals among the two organizations can make a partnership difficult. "We have a much higher level of satisfaction among our staff and less turnover when we hire them directly," says Mr. Blom.
4. Purchase electronic systems to help with practice management. Claims management, payment tracking and credentialing software are all investments that will all significantly impact an orthopedic surgeon's bottom line. Adding electronic medical records or electronic health record systems come at a steep initial cost, but their returns more than make up for the initial expense. For example, Michael Rauh, MD, an orthopedic surgeon at UB Orthopaedics & Sports Medicine in Orchard Park, N.Y., uses EHR to cut transcription costs.
"We have more than 30 physicians in our group and we measure the cost of transcription per patient across the board," he says. "We found that those who are non voice recognition users cost about $6.52 per patient. Those who continue to use the technology are reporting an average of $2.34 per patient. One of the partners found it costs him $1.06 per patient, and another reports an average of $0.63 per patient. It's a huge cost savings on the front end transcription." Those who are using this technology are also billing at a higher level because the claims are documented appropriately.
5. Incorporate new technology or procedures into your practice. Orthopedics is a fast-moving specialty and profitable practices stay abreast of the new technology available for their patients. "One of the exciting things in orthopedics is the rate of technological development, particularly with joint replacements," says Jeffrey Meisles, MD, an orthopedic surgeon with Orthopedic Specialists in Elmhurst, Ill. However, adopting new technology can be costly. Research the technology and make sure it offers a clinical advantage that outweighs the extra cost before incorporating it into your practice. Even if the implants or equipment for the procedure are more expensive upfront, they can reduce costs later by shortening the length-of-stay at the hospital, decreasing rehabilitation time or eliminating the need for revision surgery. "As long as there's an ability to improve patient outcomes, and increase efficiency, there's a potential that the new technologies can actually lower the cost of some procedures," he says.
1. Invest in a surgery center or office building. With declining reimbursement rates, physicians have to figure out how to generate additional income, says Pedro Vergne-Marini, MD, managing member of Physicians Capital Investments. One way to do that is by investing in real estate, such as an office building or an ASC. Surgeons working out of surgery centers have the potential to receive a higher percentage of the reimbursement from the cases they perform. "Every time a patient is admitted to a hospital, the bill generally is two to three times higher than it would be in the ASC. Furthermore, the physician doesn't receive the additional compensation," he says. "A procedure that would cost $1,800 in an ASC, the hospitals might charge $6,000 or higher per patient. Physicians operating in ASCs will make a higher profit while at the same time will improve the quality of care and decrease the overall cost of healthcare."
For younger physicians partnering to invest in a surgery center, it makes more sense to purchase the property instead of leasing. This is a relatively safe way to increase your net worth and to compliment a retirement plan. "When it is a physician occupied building, you can get some pretty decent loans from small businesses and the bank," he says. "When you own the building, your property will have value. You are paying with pretax dollars and doing something for protection at the same time. You can also depreciate the building so you get an additional tax benefit by doing so."
2. Add imaging services to your existing practice. More and more orthopedic practices are offering on-site imaging services, including MRIs. The most common arrangement orthopedic practices seem to use for this service is purchasing an MRI and then using a telaradiology service to interpret the images. In this scenario, the practice bills for the technical component of the MRI services while the radiology company bills for the professional fee. John Davis, MBA, principal of Medical Practice Consulting, a medical practice consulting firm based in Bantam, Conn., says this arrangement is the "safest and cleanest" due to payor concerns about who is qualified to provide imaging care. The investment required to offer MRI services in-office range from $250,000-$1 million, and savings can be found by purchasing used or refurbished equipment, which is readily available, says Mr. Davis. The cost of a new, high-quality open MRI will likely run practices between $750,000-$1 million, says Mr. Martin.
In order to determine if an MRI is a wise investment, practices should project their volume based on past MRI referrals and then determine likely payor mix as payments vary widely by payor, says Mr. Davis. For example, Medicare typically pays $350-$500 for an MRI facility fee while a private payor may pay significantly more. Mr. Davis also suggests that if orthopedic practices decide to purchase an MRI, they purchase an open MRI as opposed to one designed for extremities only. "My personal thinking is that if you're going to go there, go all the way," he says. "An extremity MRI can't be used on someone's back or hip. These can't be done correctly without a full body MRI."
3. Hire physical therapists at your practice. Adding physical therapy often increases the practice's profits and expands the continuum of care for patients. Physical therapists can also be used as physician extenders to help with office responsibilities. "If you are going to add ancillary services, you need to look beyond the fact that they are going to increase your revenues," said Mr. Blom. "You have to see it as something that is going to be part of your practice." Orthopedic practices have the option of partnering with rehabilitation and physical therapy organizations to provide physical therapy, but Mr. Blom recommends hiring the professionals on as part of the practice's staff.
"When you have your own employees, it's easier to do program development and risk management," says Mr. Blom. "You have to have a lot of faith in the other organization to do things right 100 percent of the time." Additionally, high turnover rates for physical therapists and differing goals among the two organizations can make a partnership difficult. "We have a much higher level of satisfaction among our staff and less turnover when we hire them directly," says Mr. Blom.
4. Purchase electronic systems to help with practice management. Claims management, payment tracking and credentialing software are all investments that will all significantly impact an orthopedic surgeon's bottom line. Adding electronic medical records or electronic health record systems come at a steep initial cost, but their returns more than make up for the initial expense. For example, Michael Rauh, MD, an orthopedic surgeon at UB Orthopaedics & Sports Medicine in Orchard Park, N.Y., uses EHR to cut transcription costs.
"We have more than 30 physicians in our group and we measure the cost of transcription per patient across the board," he says. "We found that those who are non voice recognition users cost about $6.52 per patient. Those who continue to use the technology are reporting an average of $2.34 per patient. One of the partners found it costs him $1.06 per patient, and another reports an average of $0.63 per patient. It's a huge cost savings on the front end transcription." Those who are using this technology are also billing at a higher level because the claims are documented appropriately.
5. Incorporate new technology or procedures into your practice. Orthopedics is a fast-moving specialty and profitable practices stay abreast of the new technology available for their patients. "One of the exciting things in orthopedics is the rate of technological development, particularly with joint replacements," says Jeffrey Meisles, MD, an orthopedic surgeon with Orthopedic Specialists in Elmhurst, Ill. However, adopting new technology can be costly. Research the technology and make sure it offers a clinical advantage that outweighs the extra cost before incorporating it into your practice. Even if the implants or equipment for the procedure are more expensive upfront, they can reduce costs later by shortening the length-of-stay at the hospital, decreasing rehabilitation time or eliminating the need for revision surgery. "As long as there's an ability to improve patient outcomes, and increase efficiency, there's a potential that the new technologies can actually lower the cost of some procedures," he says.