The increased reach of private equity, consolidation and insurance companies have fundamentally changed the way that orthopedic care, and healthcare in general, is being delivered, according to Louis Levitt, MD.
More physicians are working outside of private practice, and the physicians who remain in private practice are having to find new revenue streams to make up for declining reimbursements.
Dr. Levitt, who is vice president of The Centers for Advanced Orthopaedics and chief medical officer of MedVanta, recently connected with Becker’s to talk about the business of medicine versus the business of care delivery.
Bethesda, Md.-based Centers for Advanced Orthopaedics is one of the largest independent orthopedic groups in the U.S., with a network of more than 170 physicians.
Note: Responses were lightly edited for clarity and length.
Question: How has consolidation changed the healthcare industry?
Dr. Louis Levitt: There’s been a real shift away from the focus of care delivery to the lucrative benefits of the business of medicine. It’s not just private equity, it’s the insurance carriers that are no longer just providing insurance. They control everything in healthcare. It is private equity in the sense that they went after and bought up practices, and it is private equity that has backed all the innovations and tools we use in orthopedics. But if you look at what the health insurance companies have done, they’re overwhelmingly dominating healthcare. The word consolidation is what’s really happening to all the hospital systems around the country. The systems that we have always used to practice medicine have radically changed.
Q: What are some of the challenges that physicians are facing today?
LL: On one side is the lucrativeness of medicine. Doctors produce a lot of dollars, and everybody wants a piece of those dollars. That’s what’s brought in private equity. That’s what’s made the insurance companies want to take a larger portion of it. They’re making their money because they’re raising the cost of healthcare.
On the doctor side of it, there are also incredible forces now that I’m a bit concerned about. One is that I’m paid half today for care delivery of what I was paid 15 years ago. So my income from my clinical practice has eroded dramatically in the last 15 years. This has caused doctors to go out of their way to find a way to contribute to their revenue stream and their sources of income. These ancillary sources of revenue, such as surgical centers, physical therapy and MRI scanners have become essential. In fact, what’s happened is doctors are finding they make more money through outside revenue sources than they do from their clinical practice, which is a huge challenge to clinical practice.
Q: Why are fewer physicians in private practice settings today than in the past?
LL: The business of care delivery is now overwhelmed by the business of medicine. Private healthcare is now this little island versus all the monstrous business investment in healthcare that we’re fighting against, and in some respects, the business entities in healthcare are really winning the war. When we started the Centers for Advanced Orthopaedics, 75% of doctors in general were in private practice and 25% were employed. The last number I saw is that now only 12% of doctors are in private practice. When I talk to the new residents, the thought of private practice, of being their own doctor, of having autonomy and independence, that’s the furthest thing from their mind. They’re burdened with debt. They have to have a predictable income coming in in order to pay off that debt. So they’re looking for the salary, they’re looking for the vacation. They want stability. Because what has happened, this overwhelming tsunami of the business of medicine, has created this deafening instability within the clinical care delivery system of healthcare.
Q: How has The Centers for Advanced Orthopaedics been able to remain independent through these changes and challenges to independent practice?
LL: Myself and our other leaders got into this business to preserve the private practice of medicine, and that, to me, is still a noble goal. The reason we created CAO was because local doctors were being cannibalized by the hospital system. They were being hired away from us. The cost of practicing medicine just rose dramatically, the reimbursements took a nosedive and we couldn’t negotiate at a contractual level, as mom and pop shops with the likes of these big insurance companies. Putting together one of the largest orthopedic groups in the country gave us gravitas. It let us now be at somewhat of a level of playing field with the insurance companies. Access to doctors today has become incredibly scarce. As a result, we have a little bit of leverage using our size, but it is really difficult with these insurance carriers.
