Rising overhead and decreasing reimbursements continue to challenge independent practices as consolidation continues to take hold across the healthcare industry.
Four surgeons discuss how independent practices can best position themselves to maintain autonomy and key partnerships they should consider.
Ask Spine Surgeons is a weekly series of questions posed to spine surgeons around the country about clinical, business and policy issues affecting spine care. Becker's invites all spine surgeon and specialist responses.
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Please send responses to Alan Condon at acondon@beckershealthcare.com by 5 p.m. CST Wednesday, Dec. 22.
Editor's note: The following responses were lightly edited for style and clarity.
Question: For spine practices wishing to stay independent, what strategic partnerships should they be considering?
Patrick Roth, MD. New Jersey Brain and Spine (Oradell): In order to remain independent, bundled contracts for episodes of care must be at least partially owned by surgeons. In order to negotiate such contracts, surgeons must be part of large groups of surgeons partnered with hospital systems that can form the contracts upstream of insurance companies.
Isador Lieberman, MD. Texas Back Institute (Plano): Spine practices wishing to stay independent will need to evaluate their aspirations and resources when considering strategic partnerships. The principal reasons for a strategic partnership are to control overhead and optimize reimbursement. Under some circumstances, the drive to a strategic partnership is an effort to capture market share or gain negotiating strength. Further considerations can include practice governance, human resource management and how to handle ancillary activities.
The five fundamental issues to consider when evaluating a strategic partnership are:
1. Will the partnership provide access to new or better sources of revenue?
2. Will the partnership reduce overhead in the short term and in the long term?
3. Will the partnership allow the entity to stay independent or create an agreeable governance structure?
4. Will the partnership grandfather legacy assets?
5. Should the partnership fail, is there an equitable unwind and noncompete process?
The implementation of any strategic partnership will require a two-way due diligence process, and the practice that wishes to stay independent must make the effort to fully evaluate the implications of the new situation.
Brian Gantwerker, MD. The Craniospinal Center of Los Angeles: At times, absorption by larger entities seems imminent. The sound of inevitability being the dissolution of smaller, mom and pop medical practices. However, by providing excellent service and outcomes, there does stand to be a chance of remaining independent. I would encourage those that wish to remain independent to partner with a nearby ASC and other like-minded pain and internal medicine physicians. Demonstration of good patient care, careful case selection and good follow-through are powerful ways to belay the onslaught.
Vladimir Sinkov, MD. Sinkov Spine Center (Las Vegas): Staying independent as a medical practice is becoming harder, mostly due to declining reimbursements, increasing regulatory burdens and unfair competition from larger, often nonprofit organizations. Smaller independent practices have very little negotiating power with health insurers and typically end up having lower reimbursement for the same services than larger practices. Smaller practices also have less resources to deal with the ever-increasing burden of regulations from both private and government entities. Consolidation to larger practices is one of the most common ways to address these challenges. The problem with that solution is that the bigger the practice gets, the less independent each individual provider becomes. Eventually you are just one of many employees following the orders from the board of directors or executive board.
In order to retain true independence, a practice needs to remain small with few or just one provider and low overheads. The only way to stay relevant in the market as a small practice is to be excellent at what you do. This means providing excellent care with better-than-average outcomes. It also means the provider and every staff member must constantly provide excellent customer service to each patient and referral source.
Strategic partnerships can help reduce exposure to risk for an otherwise vulnerable independent practice. Such partnerships may include ownership in an ancillary service such as an ASC, imaging center or physical therapy. It could also include becoming part of a larger "umbrella" organization to gain access to better payer contracts, supply purchasing discounts or sharing/outsourcing administrative tasks. One must be careful, however. Just like in most situations in life, whenever there is a deal being made to gain a certain level of security or safety, it inevitably comes with some degree of loss of independence. An independent provider must weigh their willingness to lose some independence to gain security and stability in their pursuit of avoiding complete loss of independence and becoming an employee. Staying independent as a medical practice can lead to great material and (more importantly) nonmaterial rewards for the provider and excellent quality of care for patients, but requires a lot of hard work and innovation.