Teaming up with Optum was an important aspect of getting outpatient orthopedics off the ground and soaring in recent years, Amar Patel, MD, a board member of OrthoWest, said.
Dr. Patel spoke with Becker’s about how he made the most of the partnership.
Note: This conversation was lightly edited for clarity.
Question: Can you share your experience with your Optum MSO partnership? What advantages do you see with that over private equity or some of these smaller, non-private equity backed MSOs?
Dr. Amar Patel: In our area there’s a high population, but there’s a lot of competition between physicians, hospitals and private equity systems. Right around 2021 we made the deal, but before that, we were looking at all options and did not want to be absorbed by another group and then not be able to manage things and lose autonomy. Every few years, we noticed groups were beginning to be absorbed by other healthcare systems, and those patients would come to us complaining how poor the service they got was there. At times those physicians would complain and say they didn’t want to be a part of it.
Since Optum is vertically integrated, they have access to resources for assistance with other parts of our business and vendor consolidation. These economies of scale can help us reduce costs. As we have more physicians with the same goal, they could then help find more communal ways to reduce costs of care for all parties, including patients, while still providing the same excellent care.
A big part of that was identifying which services create the biggest cost, and one was doing outpatient surgeries in the hospital. We noted that if we could do in the outpatient ASC setting, we could tremendously reduce cost of care because we know hospitals have higher charges and higher costs with the same care. Patients still get the same care from the same doctor, and we just had to find an efficient model to do those in an ASC setting.
Q: Have you seen any payer negotiation advantages with this model?
AP: We’re tied to UnitedHealthcare from a management standpoint, but we still have contracts with every single insurance, including nearly all the HMOs locally. We came to the insurance companies and showed what we can offer and what we can help achieve. We partnered with Optum because they’re the one group that we had worked with the most in the past. By helping reduce the cost of all the surgeries being done, we all benefit. The metrics that we’re hitting now outpace nearly everyone else. This has now given us better access to higher contracts and also better access to patients to achieve that.
Q: Can you share any numbers illustrating these benefits?
AP: So a typical knee replacement would have almost six to eight times the charges from the hospital versus doing the same case in an ASC. Part of that is facility fees. Part of it is higher charges. Part of it is lack of cost efficiency. But bringing that case to the ASC, we can essentially cut the cost by a third. Our physicians here were performing few total joint replacements in the ASC prior to 2020. Now we have the same surgeons doing 60% to 70% of cases in the surgery center. That is really incredible.
The way we did that is that we first went to the physicians and said, “We want you guys to still be able to do the cases you want to but we want to see we can bring this to a setting that is more cost effective and more efficient.”
So we started making sure all parties were involved. First the physicians, then the surgery centers, and then the administration. We created the proper workflow and the proper scheduling and the proper staffing. Now, those physicians really bring almost everything to the surgery center. The surgery centers are happy because they have more case volume coming to them. That’s increased our production tremendously. The insurance is thrilled because they get a reduction of cost of care. But also, the physicians are happy and the patients are happy. Most patients do not want to go to hospital unless they need to. We have strict criteria for who qualifies for outpatient surgery, so if they don’t qualify for medical reasons, they go to the hospital.
A huge thanks to the MemorialCare Surgical Center partnership at Saddleback and to our administration at SCOS for making this a reality.
Q: What challenges still exist when it comes to growing outpatient spine and orthopedics?
AP: I think a lot of it was dogma, saying “I have to work in the hospital because that’s where medical care is delivered.” But we can deliver the same medical care elsewhere. The second one is with anesthesia. You need to be sure that your anesthesiologists are comfortable in the ASC. The last one is figuring out a system to facilitate outpatient care.
For outpatient joints, patients don’t have to sit in a hospital for three days or go to a rehab center. We can setup outpatient physical therapy ahead of time. We can have a home health nurse come. We can have the patients do a class ahead of time so they learn expectations.
Once we’re able to set that up and get that going, we’re able to scale things. But the biggest hurdle was really dogma and people trying to get people to understand that how we do surgery now is not how we need to do it in the future. Surgery centers typically have better outcomes, less complications, less readmission to the hospital. So all the metrics are there. It’s just a matter of hitting them.
