How an orthopedic practice grew revenue 75%, physicians 40% in 5 years

Written by Laura Dyrda | January 22, 2019 | Print  |

Since Bethesda, Md.-based The Centers for Advanced Orthopaedics launched in 2014, the practice has grown revenue by 75 percent and seen a 40 percent increase in physicians.

At the same time, the practice reported a 20 percent to 30 percent decrease in supply costs due to purchasing power and passed along savings to the patient. Today, the group is focused on new evidence-based initiatives and alternative payment models to improve clinical outcomes.

Here, Nicholas Grosso, MD, and Louis Levitt, MD, discuss the practice's growth and where it's headed in the future.

Question: Over the past five years, CAO has seen a 75 percent increase in revenue. How was the practice able to grow at this stunning pace? What about the organizational structure made this possible?

Dr. Nicholas Grosso: Many factors have helped us grow to become the nation's largest independent orthopedic group since we publicly launched in 2014. Improved contracting has certainly played a large part, as have savings through group purchasing, malpractice and economies of scale.

Since our launch, we have been able to prove our concept, deliver on our promises and ultimately demonstrate the success of our unique business model. This led others to see and trust what we were able to achieve, and made it much easier to recruit new doctors to join our group.

Q: CAO has also added several physicians and physician groups since 2014. What are the advantages of growing to nearly 180 physicians in today's healthcare landscape?

Dr. Louis Levitt: Being an organization of our size, with nearly 180 physicians across more than 65 locations, there are three advantages that come to mind. First, the larger the group, the better leverage we have when we negotiate with payers. Our size also makes us more attractive to consult for services like malpractice, commercial and non-commercial supplies and so on.

In addition, our geographic footprint, with a strong presence in the D.C., Maryland and Northern Virginia region, positions CAO to participate in at-risk contracting with both the commercial and non-commercial carriers. The private practice model also gives us the financial freedom to expand geographically.

Finally, a trend we have seen in recent years — which is part of why we founded CAO in the first place — is that hospitals are aggressively purchasing smaller private practices. Our size and success immunize us from falling victim to this trend.

Q: What challenges did you face bringing on so many new surgeons and integrating smaller practices into the larger group? How did you overcome those challenges?

Dr. Grosso: In the past, each addition of a new doctor or group was a learning experience. We came up with the best plan we could, worked through our shortcomings and kept honing the process. Now, we have a strong onboarding process with a specific plan, timeline and checklist. That's not to say it always goes without a hitch, but we've come to learn that no challenge is insurmountable when new care centers have strong leadership and are willing to put in time and effort to integrate successfully.

Dr. Levitt: It’s no secret that medicine has radically changed in the five years since we launched, and we've come to realize that new ideas are often met with some resistance from physicians. Another advantage of being a doctor-run organization is that doctors trust other doctors, so whenever we introduce a new concept, our doctors are more willing to take a new direction or to follow our leadership's guidance because of that trust factor. Building good rapport among our leadership team and our board has helped to overcome these rapid industry changes and organizational challenges.

Q: How have you been able to gather data and use it to optimize the practice? What have been the most useful data points?

Dr. Grosso: One of our biggest challenges to date and something we're still working to solve is data gathering. Data refers to a lot of things and we've been successful — slowly but surely — on collecting useful financial data and measuring our public reputation. We are currently working to move to a single EMR platform over the next 18 to 24 months, but because there is no vehicle for easy data integration with a company our size, it'll continue to be a challenge.

Q: Where do you see CAO growing over the next two to five years? Where are the best opportunities you're seeing for future success?

Dr. Grosso: In addition to adding new groups and partners in our region and beyond, one of our biggest areas of opportunities in the next two to five years is population health. We know population health is going to be a huge opportunity for growth in the coming years, and at CAO, we want to be in control of the musculoskeletal piece of population health.

Dr. Levitt: Building on that, we'll continue to evolve with technology and adapt to patient preferences, and we're also anticipating a shift in conventional health insurance as more and more practices will directly negotiate with large insurers. In our next five years, CAO would like to be a major influence across the U.S. in how musculoskeletal care and orthopedic surgery spend are utilized in the management of healthcare.

Dr. Nicholas Grosso is the president of The Centers for Advanced Orthopaedics and specializes in sports medicine and total joint replacement at his care center in Baltimore. Dr. Louis Levitt is the vice president of CAO and a practicing physician in Washington, D.C., who specializes in orthopedic trauma and joint replacement surgery. Dr. Grosso and Dr. Levitt were founding members of CAO when it publicly launched in 2014 with the goal of redefining the business model for private practice medicine.

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