Will orthopedic practice mergers be a big trend in 2015?

Written by Carrie Pallardy | March 09, 2015 | Print  |

Four industry experts discuss whether or not mergers will be a significant trend in the orthopedics field this year.

Les Jebson, MHA, FACHE, FACMPE, LHRM, administrator, faculty instructor, The University of Florida, UF Health (Gainesville): While market specific nuisances influence employment and merger considerations, assuming there are not anti-trust implications; I believe orthopedic practice acquisitions will continue by hospital systems, as well as orthopedic practices merging. This is being driven by an overall consolidation movement. If we look at how reimbursements for services are evolving, with risk sharing, bundled payments, capitation; then out of necessity, mergers will continue.


The key questions that orthopedic practices must ask themselves:


•    How many competing orthopedic practices exist in our market area, and where are the geographically dispersed and where do they perform the bulk of their surgeries?


•    Do the majority of our referrals come directly from patients, or are our referrals largely influenced by primary care practices? If so, are these practices independent or employed?  


Julie Sherriff, President, Sherriff & Associates, Inc. (Prairie Village, Kan.): Yes, indeed! We have several clients who are in the midst of some very large and innovative mergers, all over the United States.  Some mergers will occur over state lines while others are within a state or within a large metropolitan area. It is a trend that seems to be picking up steam dramatically.  This seems to be a win-win situation for improved patient care, cost-savings, and physician satisfaction.  


John H. Shim, MD, ShimSpine (Tampa, Fla.): Frankly, orthopedic practices have been in the consolidation phase for quite a long time. Orthopedic surgeons are still subject to the laws of economics. Originally, doctors' offices were like Mom and Pop stores. But, the complexity of medical care delivery and of the reimbursement environment has forced change.


In the past, the patient may have been the customer. No more. The customer for most physicians remains the government or large insurance carriers. With increased burdens to administer the relationships been the doctor and the customers, a whole industry was set up to help the physician navigate all the rules and needs. There are billing experts, compliance experts, risk management experts, etc.  Then some doctors realized there is some advantage to joining together to share these administrative burdens. Groups started to consolidate to take advantage of the savings. Then, the government and insurance companies realized the need to control the growth of these costs, therefore started more heavy handed negotiations with these smaller doctor groups.


Doctors, like any business sector, started to further consolidate to gain some strategic advantage.  Hospitals started to buy physician practices to vertically integrate more of the healthcare resources to gain better negotiation leverage. For individual small groups, those who were not part of the consolidation, had no bargaining power.


In my opinion, we will continue to see more consolidation in order to achieve better negotiations and access to the government and insurance plans. In addition, with the push for bundled payments, and gain sharing oriented plans, only large groups will be able to demonstrate the ability to develop such programs. In the end, a doc will be part of a very large group (even as an employee), or go off the grid, with a very niche, personalized healthcare delivery care model (concierge).


Jason Weisstein, MD, MPH, FACS, EMA, Orthopedics Team Lead, Modernizing Medicine: Orthopedic practice mergers will likely be a significant trend this year as they search to contain rising costs. The benefits of practice mergers include, increased volume, sharing of ancillary services and improved leverage against private insurers. Market share may also be increased with such mergers. There are many key ingredients to successful mergers, but perhaps most important will be the ability to capture health data in a structured manner so that it can be communicated in a consistent way across organizations gathering and analyzing relevant and previously unknown information.


An electronic medical record system such as EMA Orthopedics captures structured data and was built to enable the user to review the data in the system and determine clinical outcomes related to surgery type or pharmacological treatment. Such data is at the core of ongoing governmental and private health insurance company discussions as cost containment becomes increasingly important. Moreover, an EMR system such as EMA Orthopedics, with its ability to automatically assign ICD-10 codes, generate meaningful use and PQRS reports, paves the way for practice merger success as large groups of orthopedic surgeons jockey to be efficient and maintain high patient volume


More articles on orthopedics:
Dr. Richard Rothman's article featured in Sports Illustrated
Dr. Frank Kelly receives Physician of the Year Award
Dr. Vermon Esplin travels to Cuba with USA Wrestling

© Copyright ASC COMMUNICATIONS 2018. Interested in LINKING to or REPRINTING this content? View our policies here.

Top 40 Articles from the Past 6 Months