The future of spine practice and bundled payments: 6 key thoughts


Spine surgeons are successfully transitioning more complex procedures to the outpatient setting, but face obstacles from payers despite the move to value-based care.

At the Becker's 17th Annual Future of Spine + Spine, Orthopedic and Pain Management-Driven ASC Conference, four panelists discussed the key trends and opportunities in spine today. The panel included Frank Phillips, MD, director of the division of spine surgery at Chicago Rush University Medical Center; Richard Wohns, MD, founder and president of Puyallup, Wash.-based Neospine; Chris Bishop, CEO of Regent Surgical Health; and Cheryl Zapata, chief development officer of Plano-based Texas Back Institute.

1. More complex spine cases are moving to the outpatient setting, but there are roadblocks. Both Dr. Phillips and Dr. Wohns believe spinal fusions, multilevel fusions and more complex cases are moving to the ASC. Rush has surgeons doing lumbar fusions in the ASC, and Dr. Wohns has performed disc replacements and multilevel procedures there.

However, while the minimally invasive technology and pain management technique exists to transition more complex spine cases into the ASC, insurance companies may not approve coverage. Dr. Wohns sees denials as an ever-present aspect of his business and forcing in some cases even simple spine procedures into the hospital.

2. Bundled payments are disrupting traditional healthcare payment and delivery models, but spine won't be as easy as total joint replacement. The federal government has led the way with bundled payment initiatives, including BPCI, for total joints and select spine cases. "I think good or bad, bundled payments are an inevitable force in a value-based care environment," said Dr. Phillips.

Both he and Dr. Wohns have experience with BPCI bundles and experienced mixed results. Surgeons report success with total joint bundles because for patients with similar pathology, the procedure is straightforward and repeatable to achieve predictable results. The same is not true for all spine cases.

In spine, patients with a broad spectrum of complexity are considered for spinal fusion bundles. While patients undergoing spinal fusions without other comorbidities may do well, the more complex patients need extra services. Dr. Wohns reported success with bundles in the outpatient ASC and reported attractive numbers to insurance companies and cash pay patients. However, the risk management was not as reliable in the hospital setting with older patients that tended to have comorbidities and cardiac issues.

"You could do OK [with the bundles], but all you need is one patient that has a postoperative infection and your profit margin is wiped out for that patient as well as the prior 10 patients," he said. "The bundling of inpatient spine that includes high comorbidity patients is really not attractive to me at all."

3. Commercial payers are now interested in risk-based payments. After CMS experienced a degree of success with BPCI, private payers are warming up to the idea. Regent Surgical Health launched a bundled payment initiative three years ago as a defensive move to prevent outside conveners setting the price for joint replacements performed by his surgeons.

"We started out looking for a partner and couldn't find anyone out there that would put the resources around the physician so they could control the process and develop the clinical pathway design," Mr. Bishop said. So, Regent developed its own program and large insurers are taking notice. "That tells you we are getting much closer to the inflection point where we are going to see bundles becoming predominantly how we get paid for joints, spine and higher acuity cases."

4. Practices face two main options for growth: accepting smaller distributions to retain capital for growth or bringing on private equity partners. "[Retaining earnings] is nice because you keep the money within your group, but each individual receives less at the end of the year," said Dr. Phillips. "You have to be willing to do that for the greater good of the group ultimately."

Private equity investment injects immediate capital into the group without lowering distributions, but that approach isn't right for every group. "The downside is you lose control to some extent for sure," said Dr. Phillips. "But in exchange for having retained earnings, you get a nice pad upfront and the remaining is paid as capital gains and it's a nice tax structure. These are the strategies practices are wrestling with."

5. Orthopedic and spine practices are consolidating, but there is still room for boutique practices. Dr. Phillips and Mr. Bishop both feel extreme consolidation in the field will likely continue. It has become expensive to run a solo or small group practice and compete with the larger health systems. Recruiting new physicians is also a challenge, especially on the financial health of a medical group.

"Getting new physicians has become very expensive," said Dr. Phillips. "We are subsidizing the new physicians for close to five years before they make money, if you look at direct and indirect costs."

There are some practices, including Dr. Wohns' group, that can thrive as a small group in select markets, and he thinks small groups are still very viable. Surgeons coming out of employment situations that want more autonomy will be willing to join smaller practices, as well as entrepreneurial-minded surgeons coming out of fellowship.

"They know if they are employed in a large group they won't be able to express their entrepreneurial spirit," said Dr. Wohns. "They seek out smaller, boutique practices like ours. We have doubled in size over the past few years with new surgeons and pain physicians."

6. Practice sales and marketing are a key factor in growth. The ever-changing patient world of digital marketing and preferences of healthcare consumers require nimble strategies to keep up. Texas Back Institute has a sales team that focuses on deep relationship building with referring physicians while the marketing team oversees advertising and other initiatives outside of sales.

"The single most important thing we do is try to make sure even on the marketing side we are developing relationships with the public," she said. "We do marketing not just around what a spine issue might be, but also about who are doctors are and how they relate to the public."

The practice does a lot of online marketing, with a strategy that changes from year to year. Texas Back Institute does influencer marketing and tailors key search words for searches on the desktop, tablet and mobile devices. The searches change depending on whether someone is typing or using a speech to text.

"The internet for us is a very strong tool, specifically for social networking," said Ms. Zapata. "A lot of people don't think social networking really adds any kind of value to the patient because patients don't say they saw us on Facebook. But after they get a referral from a friend, they look us up on Facebook and that's where they connected with us. I think that's the place where our personality shines as a group."


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