Rising consolidation has given breath to orthopedic supergroups with 100-plus physicians. Three orthopedic surgeons told Becker's Spine Review what they believe supergroups will mean for smaller practices and the industry.
Question: How do you predict supergroups will affect the orthopedic landscape and smaller practices in the next two to three years?
Editor's note: Responses were edited for style and length.
Tim Ekpo, DO. Henry Ford Health System (Detroit): The landscape of the orthopaedic specialty group has definitely changed over the last decade or so and I believe will continue to trend in favor of the large “supergroups.” Many smaller groups have either joined forces to become part of a supergroup, or have been bought out by a hospital [or] health system to pursue employment.
Given the current state of medicine, unless deeply rooted, well established and very busy, I think it will be difficult to survive long term as a smaller practice.
To be clear, it’s not only a matter of surviving but more-so thriving.
Many of the supergroups that have formed understand the leverage that exists when it comes to referrals and contracting with insurances and payers. With such a large network of physicians and facilities, they are better able to control access, cost, quality and outcomes.
There is significant value in that, and everyone involved in the episode of care including the patient can appreciate it. Equally as significant, payers are open to a mutually beneficial relationship to better care for patients while controlling cost.
I believe over the next few years, the positive economics of being part of a supergroup will become more apparent and we will see continued trends in their formation as we deviate from the smaller group practices.
David Jacofsky, MD. The CORE Institute (Phoenix): Regardless of whether physicians view recent changes in healthcare as stepping stones or stumbling blocks, it is clear that change is the one constant we can expect to see over the next decade. These changes are many, but specific to consolidation include increased administrative burden, decreasing margins and the need to invest in meaningful infrastructure to manage data, claims, and value-based care initiatives.
Whether providers agree with the shift in reimbursement from volume-based to value-based, it will inevitably continue to occur. Despite some mixed results in prior models, payers, including CMS, are rapidly zeroing in on the models that seem to work best. This leaves many smaller physician practices in a bit of a predicament, as they need to make significant investments in the face of generally decreasing reimbursement and increasing administrative burdens that reduce throughput and efficiency. As such, there are limited options for smaller groups in many larger markets. These practices may become employees of health systems and/or payers, which immediately leads to loss of autonomy and, in most studies, eventually a decline in quality care, decreased physician compensation, and increases in costs to patients and payers. Otherwise, a different option is consolidation into larger independent private groups that have the financial wherewithal to make investments into a fully developed and experienced C-suite team, as well as the tools and IT infrastructure needed for financial success in the evolving healthcare space.
One issue with consolidation is that studies have shown that without existing infrastructure, costs can actually increase rather than decrease with size, and payers no longer respond well to scale alone when groups try to leverage fee-for-service rate increases without objective claims data that proves a return on investment for the payer. Some consolidation is being driven by private equity transactions, which have been disastrous for some groups in surgical specialties for reasons outside the scope of your question.
Although these transactions provide financial support and some monetization, they do not come with a value-based care strategy nor the infrastructure to improve operations and the patient experience. Private equity backed strategic partners may offer the best of both worlds, meaning that they transact with similar economics for the group, but can predictably improve costs, efficiency, patient experience, and can meaningfully increase revenue through well established programs with national payers in the value-based reimbursement space.
There is likely no single “best answer” for all groups. Smaller groups who are feeling these pressures must ask themselves where they want to be in three to five years, what strategy will best get them there, and who might be the best partner to most predictably execute on such a strategy. Certainly, some of these decisions will vary by market, but all will vary based on the goals of the physicians in each particular group.
Paul Apostolo, MD. Northwest Hospital (Randallstown, Md.): Formation of supergroups was the only practical response to rules that favor hospitals over small practices. This will ultimately play out poorly for consumers, as inequities in the marketplace almost always do.