1. Medicare and Medicaid practice payment cuts. Physicians are facing drastic impending cuts to their professional fees.
Medicare’s sustained growth rate which is used to calculate payment rates is flawed,” says Mr. Love. “We have faced these incredible cuts in reimbursement that have been delayed over the last several years, but the formula is still in place. What’s more … there will be double-digit reductions for professional fees. The impact of those reductions will be very significant, especially for Medicare and Medicaid.”
Mr. Love says a potential effect statewide and nationally is that physicians may limit the number of Medicare and Medicaid patients they’re treating or opt out of Medicare altogether. There will also be a ripple effect on commercial payor contracts if they are tied to the federal rates, he reminds.
This decrease will make it all the more important to separately focus on the increasing number of patients who are taking part in high-deductible health plans as part of the push for consumer-driven healthcare.
“We are investing more in overhead and labor hours to prepare, because this movement puts the onus on us to screen thoroughly for treatment,” says Mr. Love. “The patient must understand what his financial responsibility will be with regard to payment — especially to payment up front — so that he isn’t hit with an unexpected bill and we ensure payment for services when they are rendered. We’re also making use of technology to ensure we capture our charges accurately and bill appropriately and stay in compliance with our contracts.
“Purely from a billing point of view, it’s more complex and your coders have to be more astute to ensure your practice is not missing charge opportunities when physicians perform services.”
2. Contracting with third-party payors. Orthopedic and surgical practices are again facing significant challenges from large payors. Large payors are making aggressive efforts to “rebalance” payments. In practice, this means they are attempting to pay less to proceduralists and more to those who provide evaluation and management services for independent orthopedic practices, where a great percentage of revenues come from procedures.
This renewed effort, combined with increasing payor leverage in many markets, has the ability to greatly decrease orthopedic revenues in the short and long run.
3. Recruiting clinical and business office staff. “Recruitment is always a challenge,” says Mr. Love. There are a sufficient number of physician assistants to meet the demand for the present, but “there are fewer orthopedic physicians nationwide, and hiring a physical therapist or physical therapy assistant is just about impossible these days. It’s an ongoing challenge to have skilled support staff, coders and insurance billers, reception and front desk staff — you need good people all the way down the line.
In addition to demonstrating to prospective physicians, clinical staff and business office employees that your practice employment is dynamic and growing — adding ancillary services, for example — offering training support is good for recruiting and retaining, as well as key for keeping your facility on the cutting edge.
“Training is becoming more critical for providing staff with the skill sets to be successful, and to give patients excellent care and service,” says Mr. Love. “For example, we embarked on EMR a couple years ago, and it’s been filled with challenges; but you have to pay to train staff in order to implement new technology and keep their skills and your facility up to par.”
4. Changing relationships with hospitals; achieving détente with hospitals.Hospitals are again flexing their muscles in their relationships with physician practices. Over the last two to three years, hospitals have refocused their energies on acquiring and employing orthopedic and neurosurgical practices. Here, the efforts are more directed today on focused, high-revenue practices as opposed to primary care practices. This effort, in many markets, has come with the attitude implied or explicit that there is no longer room or will not be in the long run room for truly independent practices.
“For a long period of time, hospital administrators were not attentive to the needs of surgeons; they took what we did and how we did it for granted, which led to a great deal of frustration,” says Dr. Austin. “When we had an opportunity to set up our own facility with our own protocols and oversight, we jumped at it. And it’s worked out better than we possibly could have imagined. It proved we could do what we wanted more efficiently.”
Hospitals have not always taken well to these kinds of practice driven successes. However, as time has gone on and outpatient surgical facilities have become more integrated in healthcare, hospital administrators are “starting to get it, and understand how ambulatory surgery centers (ASC) can be beneficial to them,” he says.
While the opening of an ASC can alter the relationship between hospitals and surgeons to become more competitive in nature, it doesn’t have to be that way if each side recognizes what the other brings to the table.
“There are still a lot of orthopedics cases that can only be done in the hospital, that require appropriate post-op monitoring, such as joint replacements, fractures, traumas — these just aren’t geared for the ASC,” says Dr. Austin. “The ASC doesn’t answer all the needs of the medical community. We have different functions, different efficiencies, and as long as those are realized and appreciated, each can thrive in its own area. From our perspective, the hospital is not considered a competitor, but an ally and a complement.
“As a result, we support the hospital regularly, donate to causes, present at charity functions. We could not do what we do without a hospital, which is a necessary element of any community — the stronger the hospital is, the stronger we are.”
5. Developing ancillary services. Orthopedic groups are increasingly looking to offer a range of integrated services to their patients, including MRI and physical therapy, under the same umbrella as the practice. Ancillary services may also include ASCs and physician-owned hospitals.
“With the professional fees component going down, other revenue sources, such as PT, MRI, ASCs, durable medical equipment sales, bone density screening and others are increasingly important, but development of those ancillary income streams come with their own challenges levied on them,” says Mr. Love. “For groups such as ours in certificate of need states, it can be very costly to pursue [a CON to add services] only to be turned down. And, in some states, the physical therapist association has been effective in getting physicianowned PT practices banned.”
Roanoke Orthopaedic Center’s ancillary services include an osteoporosis program that includes bone density testing, physical therapy, dispensing durable medical equipment, and it continues to explore further options.
“Some groups doing durable medical equipment sales are taking it to the next level: A group in Charlotte, N.C., is doing retail DME,” says Mr. Love.
Contact becker@beckersasc.com.
