Know your goals; know your worth: 5 surgeons' advice on hospital contracts

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Key considerations for spine and orthopedic surgeons looking into hospital contracts include evaluating financial worth and shared values.

Here's what five spine and orthopedic surgeons advise regarding hospital contracts:

Note: Responses were edited for style and clarity.

Alen Nourian, MD. Solo practitioner spine surgeon in California: There are several key considerations when orthopedic surgeons are considering entering into a contract with a hospital system. One of the most important considerations is to make sure that the surgeon is allowed to buy into any outpatient surgical center associated with the hospital. As more spine surgeons are doing surgeries in outpatient surgery centers, it is very important that when joining with a hospital that there is a carve out to be able to buy into the hospital outpatient surgery centers or any affiliated outpatient centers. The other important factor for surgeons entering into possible agreement with a hospital is the ability to choose the type of spinal implant and technology. Some hospital systems are limited in which companies they are contracted with and limited on the latest technology including navigation. It is important that surgeons are allowed to help collaborate with the hospital.

Brian Cole, MD. Englewood (N.J.) Spine Associates: Each physician has to examine what are the problems they are trying to solve. It seems to me that most physicians want to increase revenue but at the same time maintain autonomy and minimize the bureaucracy.

What is the expected revenue model? Are you being paid a salary, paid per RVU? Cost savings arrangements?

Are you charts or assets being acquired? 

Will you still be able to control your ancillary services such as X-ray, physical therapy, etc.?

What insurance companies would you be required to accept? If you were required to take a particular insurance, do they have better contracting rates?

What are the work conditions? Are you required to work a number of days/hours, see a certain amount of patients?

Do you own your staff and what kind of control do you have over staffing issues?

If the arrangement fails what are the unwind provisions? Are there monetary penalties? Who owns the charts for patients treated under the arrangement. Is there a restrictive covenant?

Jimmy Chow, MD. Orthopedic Institute of the West (Phoenix): I've found that the best contracts are ones that are beneficial to both parties, and should be viewed as a collaboration. Lopsided agreements, whether perceived or real, tend to be short-lived.

Do your homework. Surgeons, like all skilled workers, often believe that they're worth more than they really are. On the other hand, don't forget about other values you might bring to a hospital system, and try to place a value on those things. Get a real financial understanding of your potential net revenue within the hospital system and compare that to your current circumstance. And don't forget about additional value-adds that hospital systems bring, such as benefits, overhead, administrators, etc.

Do some honest soul-searching. I think it's really important to understand what's important to you, and what you're willing to give up to get those things. Hospital systems generally will want productivity and return on their investments. Surgeons often want decent pay, support, and freedom of practice. Since the important things are slightly different for both parties, there should be great room for negotiation and mutual agreement.

Lastly, I've found that the best arrangements are ones that remain fluid. Hospitals and surgeons should have no problem renegotiating their arrangements based on performance for both parties over time. In the end, we all want to be treated fairly for the work that we do.

Deepak Reddy, MD. South Bend (Ind.) Orthopaedics: I think the key point for spine surgeons to know is how much value they command. As a spine surgeon, in addition to the facility based surgical revenue, the downstream revenue of physical therapy, imaging, bracing, etc., is a very large number. Oftentimes spine surgeons, especially those in the first five years out of training, underestimate what they bring to the table when entering into agreements with hospitals and end up being taken advantage of. Knowing your downstream financial worth is essential to effective negotiations with the hospital systems. It seems all too commonplace for large systems to grossly underpay spine surgeons for call pay, clinical service line guidance, participation in value added tax or leadership roles, operating room optimization, implant selection and negotiations, and quality improvement roles.

Eeric Truumees, MD. Texas Spine & Scoliosis (Austin): Surgeons are increasingly contracting with hospitals in a variety of areas from service line management to full employment. As they do so, a variety of questions and issues come to mind, but none is more critical than “Are we working toward the same goals?” If you do not clearly understand the mission and strategy of the organization, I would be very cautious entering into a binding agreement. In other circumstances, a strong partnership can improve care coordination and quality and, possibly, improve your patients’ access to the latest technology.

Whether managing a service line or entering an employment or other professional services agreement, understand the organizational structure and who, ultimately, makes the decisions. Will you be given responsibility for issues over which you have little or no power? For some organizations, “physician-led” is more aspirational than real.

Careful thought has to be given to the restrictions any agreement may place on one’s practice or group. Will your patients be locked into hospital based sites of service? Will you agree to a non-compete? Understanding your local competitive landscape and the degree to which the hospital systems accept your most common payers’ plans.

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