Orthopedics and spine — 6 trends for 2016

Scott Becker and Laura Dyrda -  

As we move into 2016, we see the following six trends and concepts front and center for orthopedic and spine. We would welcome thoughts and comments from others as to what you see as the big trends.

1. The growth of super groups. Here, we see the continued emergence of super groups like OrthoCarolina, Rothman Institute, IBJI, Midwest Orthopedics at Rush, OrthoIndy, Newport Orthopedic Institute, The CORE Institute and others. These are great large groups that have an important place in the community and are expanding. These groups tend to do well for their physicians and tend to serve a market for payers.


Exact terms of merger agreements vary, but many independent, entrepreneurial orthopedic surgeons can find the larger group attractive because they're able to continue running their practice with the economies of scale advantage of a large group. The affiliates give small operations leverage in payer contract negotiations, support for electronic medical record implementation and access to shared knowledge among colleagues.


2. Spine sector. In the spine sector, we continue to see both large teams — Texas Back Institute, Laser Spine, Virginia Spine Institute — as well as individual surgeons aggressively try and carve our niches by themselves. We continue to see the development of great individual spine entrepreneurs. Some are finding it more challenging to stay independent.


Merger and acquisition deals among physician practices nearly doubled in the first quarter of 2015 compared with the same period in 2014 and continued to grow throughout the year. There were 21 deals in the first quarter last year and physician practice management companies led 18 of them. At the same time, hospital and health system practice acquisition slowed.


3. No contract spine groups. Over the past few years, we have seen the emergence of "no payer" contract spine groups. These groups still take insured patients. However, they work with the patients to obtain payer reimbursement and, in fact, have such an elite reputation that they can be a no contract spine group and still do tremendously well.


4. Bundled payments. Bundled payments have been rumored to be on the move for years and years. Now, we are actually starting to see them really develop. Large employers including Wal-Mart, Lowe's and Jet Blue launched bundled payments for six specialties including spine surgery. Throughout the country payors and orthopedic groups and spine groups are looking more heavily at bundled payments. For example, OrthoCarolina contracts for orthopedic and spine bundle payments with Blue Cross Blue Shield of North Carolina with bundles running from $22,000 to $30,000 per procedure, according to The Charlotte Observer.


Half of all physicians, 78 percent of hospitals and 80 percent of payers find bundled payments appealing, according to Strategy&. More than half of the hospitals attempting bundled payments report wanting to increase the procedure volume, case settings and partners included in the bundle. Eighty percent of hospitals with bundles report improving patient engagement, increased alignment with physicians and reduced administrative costs.


5. Stubbornly independent. Orthopedic and spine groups remain stubbornly independent. This has been more so than we would have expected. As the world has moved towards more and more physicians employed by hospitals, we continue to see a great deal of spine groups remain significantly independent. There are 15 percent of orthopedic surgeons still in solo private practice and 35 percent in a private practice orthopedic group, according to American Academy of Orthopaedic Surgeons Census data. There are 10 percent in a private practice multispecialty group setting and only 15 percent have a salary from a hospital or medical center.


6. ASCs and ancillaries. ASCs and ancillaries remain as or more critical as ever to the financial and practice success of orthopedic groups. Key ancillary services for orthopedic surgeons can include imaging such as MRI or musculoskeletal ultrasound, physical therapy, neuromonitoring, durable medical equipment and ambulatory surgery centers. In the past three years, 41 percent of independent physicians and 20 percent of employed orthopedic surgeons reported adding ancillary services to their practice, according to the 2015 Medscape Orthopaedist Compensation Report.


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