75 tips to improve your surgical practice’s bottom line
In order for your surgical practice to survive and thrive in this economic environment you need to constantly review your goals, methods, and processes. Here are some proven strategies for your practice to become more profitable.
With costs on the rise and reimbursements plummeting, the days when surgeons can rest their business success purely on their medical skills are gone. "There is a constant downward pressure on what we are paid to deliver care," says Frank Kolisek, MD [1], a nationally ranked, award winning orthopedic surgeon. He recalls that when he first opened for business in 1992 the Medicare reimbursement for a certain type of orthopedic procedure was at least 55 percent more than it is today. Meanwhile, overhead costs have increased. “My overhead then was around 40 percent.” he states “Now it is 78 percent. At the same time, I'm collecting fewer dollars than I did 20 years ago. Faced with these figures, many physicians are simply choosing to retire early, or else seek more secure employment in hospitals.
Read an interview with Alexander Vaccaro MD, PhD
Yet, even despite these limitations some business-savvy practices are still managing to achieve financial gains. The following tips are designed to help to improve your bottom line while at the same time providing high quality patient care. Use it like a dictionary: go through the headers, then read what catches your interest.
What are your goals?
To be financially successful you have to set your sights on five primary financial goals (click below images to jump to respective section).
1 Cut costs
2 Increase revenue
3 Manage staff
4 Market your business
5 Invest wiselyin technology
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CUT COSTS
Rising costs can sneak up on you. They can also put you out of business, so you need to keep one eye firmly on your accounts at all times. A sharp eye for unnecessary expenditures is an essential management skill. In the current healthcare environment, that means each and every operating cost needs to be questioned, so that you can find new ways to make valuable savings:
1. Get your books in order
Once you can track the changing costs and benefits of each procedure over time you will be in a much better position to manage those expenses [2].
2. Analyze workflow
When you stop considering how things can be done better you stop improving. Every so often, review who does what and how effective each process is in order to ensure effective procedures.
3. Benchmark surgery data
Comparing your key indicators, such as infection control, patient falls, patient burns, antibiotic protocol, case cost, OR turnover time and staff wages to industry benchmarks can help you to identify areas where improvement is possible.
4. Specialize to increase efficiency
Cutting costs doesn’t require that you lower standards. Craig Levitz, MD [4], an orthopedic surgeon and partner at Orlin & Cohen, a US-group practice that has grown 30 percent in revenue over the past few years recommends developing an ultra specialization. "If you are setting up to do the same thing every day with the same team, you work quickly."
5. Consider advanced surgical support
Just as you become more efficient the more that you are able to specialize, you can save time and money by also working with a specialist team. Specialized first assistants are generally worth the extra cost because they can enable more efficient surgical procedures.
6. Share costs
Group practices can amass a team of complimentary specialists in order to offer a variety of services whilst also sharing the costs of overheads. Office space, for example, can be shared between them on different days. "To pay the rent on a separate office for each doctor doesn't make sense," says Dr Levitz. "Invest your resources in aspects of medicine that are going to deliver increased revenue."
7. Build relationships with post-acute care providers
Danielle Streenivasan, MHA [6], senior manager with Healthcare Consultants “The Camden Group”, advises that not only are post-acute care providers such as home help, or skilled nursing facilities likely to lower the costs of bundled, all in one treatment payments, but that on top of this, improving transitions from inpatient care to post-acute care can reduce the likelihood of readmission.
8. Schedule multiple surgeries on the same day
Surgery is rarely reimbursed at cost. Since it takes time to prepare the patient and OR for surgery and the surgeon must stay at the hospital until the patient wakes from surgery, it isn't efficient to only perform one surgery at a time. (The surgeon might be there for eight hours and being paid for three.) When orthopedic surgeons have multiple ORs available to them they can efficiently move to the next room for surgery.
9. Mark patients in pre-op
It’s been estimated that in the US alone, wrong site surgery occurs on average between 5 – 10 times every day [7]. This figure is alarming, not to mention costly. In order to avoid this risk, it is important that the patient is consulted when they’re awake, so that the target surgical area can be checked and clearly marked.
10. Position patients effectively
Correct positioning is important as it improves line of sight. If surgeons let OR staff position their patients they need to check these positions before the patient is prepped for surgery – rather than waste expensive surgery time making adjustments.
11. Check drug profitability
Check if the drugs you use could be swapped with others that are just as effective but offer higher margins.
12. Negotiate hard bargains
Everything is potentially negotiable. Accounting fees, bank charges, merchant fees, property leases, insurance charges and equipment costs may all be available to you for less if you ask the right questions. If you’re part of a larger practice it may be time to ask ‘what can you do for me?’ Review agreements each year. For example, ask your current vendor to give you a list of their cards, take that list to competitors and ask them to quote on how much they can provide that sort of service for. Bank charges are often less than credit card fees. Negotiate for savings or find another processing service.
13. Avoid automatic renewals
Get competitive bids on the top 20% of your costs and ask your preferred providers (including friends) to match those bids.
14. Pay attention to changes in billing codes
Be careful however if purchasing cheaper drugs internationally as they may not be covered by domestic codes.
15. Restrict surgical supplies
Unused, open surgical items can cost surgeons hundreds of dollars. In order to eliminate surgical supply waste insist that OR staff do not open any supplies (such as shavers, anchors and dressings), other than the obvious (i.e., retractors, knives, etc.), until you explicitly ask for them.
16. Manage pain
According to Dr Guanche [7], pain is the main reason for costly readmission after surgery. "A good anesthesia group is key to reducing pain," Dr Guanche says. "We've seen a huge difference in patients' pain after surgery with nerve blocks, so finding a group that can efficiently do blocks is beneficial, especially if the surgeon is not willing to wait." Other post-operative techniques, such as compression and ice, can also help ease patients' pain. Larger incisions require more care again.
17. Shorten the pre-operative phone call
Thomas Wherry, MD [7], principal of Total Anesthesia Solutions and medical director for Health Inventures warns that triage time can easily blow out. He says "if anesthesiologists do not take ownership of the process, the center spends a lot of wasted time on the phone call asking questions that aren't as directed as they could be,". Additional savings could be realized if the pre-op and recovery room staff make the calls versus a full-time phone call nurse. He recommends that anesthesiologists explain which information is necessary for the procedure and try to reduce the phone call to less than 10 minutes. "[Staff members] are trying to do their best, but these calls can turn into half hour conversations," Dr Wherry says. "Anesthesia has to step in and say, 'This is all we need.'"
18. Reduce credit card fees
Emphasize electronic fund transfers to reduce fees. Encourage customers to use “bank apps” on mobile devices that can expedite fund transfers without the cost of credit card processing charges. Using the AAOS Revenue Management Program (www.gatewayedi.com/aaos) can also help reduce credit card processing fees.
19. Review your insurance
If you’re close to retirement your life and/or disability insurance may no longer be essential.
20. Outsource less
Can internal staff use slow periods to do some of what you are currently paying externals such as cleaners, or data entry personnel to do?
21. Minimize overtime
Make sure that all overtime hours need authorization daily; stagger work schedules to spread staff coverage through the day; give employees doing long hours an afternoon off; use extra part-time staff instead; check if all staff are needed all the time.
22. Minimize the risk of staff embezzlement
Medical practitioners should be involved in the day-to-day process of write-offs. It is also useful if somebody external to the business checks the books every quarter – and, importantly, that this checking procedure is seen to occur.
23. Review equipment maintenance agreements
Particularly if equipment is old, it might be cheaper to replace it rather than to fix it.
24. Cut back on storage space
If you’re using less paper get rid of those outmoded paper files and either rent out, or re-use that space in more profitable ways.
25. Take thirty days to fill a staff position
Rather than automatically fill a vacant position, first check to see if current staff can fill that gap and review how they do so. If they can manage without, it may mean that you were previously overstaffed.
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INCREASE REVENUE
Once your costs are as lean as they can possibly be, there are still numerous, powerful strategies available for developing profits. Importantly, to increase your bottom line you must also optimize the amount of money coming in.
26. Increase your work hours
Increasing your clinic hours by one more day could increase your bottom line noticeably. What time do you start work? Can you start earlier? Or work later? Can you work another half day a week? The more patients you see the more money you can make – particularly if your maintenance and equipment costs are unchanged.
27. Strategize your work schedule to busy periods
Track busy clinic days and work more at those times. For example it might be more profitable to work Saturdays and to take Mondays off instead.
28. Strategize vacation times
Similarly, rather than take holidays over Christmas, public or school holidays when busy patients may at last have time to attend to their health, it is often more profitable to take vacations during quieter periods.
29. Provide efficient strategies for out of hours consultations
Increasingly, patients expect to be able to contact you whenever they need, wherever they are. You may, or may not wish to give out your mobile number, but it is increasingly worthwhile to provide some relatively effective way to either contact you, or an assistant as the need arises.
30. Either charge for flexible consultations, or direct patients to pay for fee consultations
You can instigate a timed charge for phone calls. Alternatively, unless there is a medical emergency it is possible (and important) to gently remind patients that they will need one on one consultation in order to receive the full service they require.
31. Overbook the schedule
If 15% of your bookings don’t show up on any given day then it might pay to overbook the schedule by 15%.
32. Develop a fair and reasonable no-show policy
Consider strategies that you could use to encourage patients to show more often for their appointments such as a part charge for no-shows, follow up accountability questions, or a delay on repeat appointments.
33. Know what limits your practice
Do you need a bigger waiting room, or more exam rooms, or to find ways to serve patients during evenings and over the weekends? Knowing your limits can help you to address them.
34. Know your referrals
Be sure to ask your patients how they came to find you, so that you can target those sources in your marketing efforts.
35. Code accurately
Keep abreast of code changes and code consistently and accurately across your practice. Matching the encounter forms collected at check-out to your office schedule can help to capture charges. Avoid block coding and instead capture the charges for every single procedure you perform.
36. Consider taking on an associate
Complimentary specialist groups can accept more of the patients who come their way. “We want to see everyone who walks through the door," says Dennis Crandall, MD [8], founder of Sonoran Spine Center in Arizona, US. "…We have to be able to take on surgical and non-surgical cases, work-related issues, tertiary or simple cases."
37. Provide ancillaries with continuity of care
Orthopedic care involves more than surgery. If a practice can also provide fully integrated X-ray, MRI, physical therapy services and even a surgery center in addition to its clinic, patients can benefit from the onsite convenience of a network of specialists who are all in communication about their individual care throughout all phases of their treatment, says John Wipfler [8], CEO of OA-Centers for Orthopedics in Portland, US. "Ancillaries are a big part of our ability to survive over time. This is in part because it is more cost efficient as well as improves quality of care as a result of the continuity of care by providers who are all on the same page."
38. Be cutting edge
Adding high value procedures such as complex spine procedures or total joint replacements that may not be available elsewhere can also help your practice to stay ahead of the competition.
39. Evaluate durable medical equipment services
You need to know if what you are offering is still profitable and state-of-the-art. Stay abreast of what else you could offer in terms of these services.
40. Consider focusing on niche markets
By concentrating on sub-specialty areas it may be easier for practices to target new markets. Focusing on specific facets of the industry and marketing clinics around them can help promote that aspect of your practice, improve patient care and eventually clinical outcomes.
41. Expand into new markets strategically
Expansion can only increase revenue if there is enough demand to support new services. Spine practices can test the waters by meeting with hospital administrators and potentially forming a partnership, such as a co-management arrangement.
"Nowadays, you are seeing a growing trend of physicians becoming employed by hospitals," says Alexander Vaccaro, MD, PhD [8], a spine surgeon and one of the founding partners of the Rothman Institute. "That hasn't happened with our group. When we are looking to expand to a new location, we look at the area of orthopedic care and ask what would work well with the hospital. If the area is well served, we don't have an opportunity. If the area needs more orthopedic service, we go to the hospital and see how we can work with them."
Physician-Hospital Integration Strategies to Maximize the Bottom Line for Orthopedic Services (OrthoServiceLine.com)
Economic pressures are inspiring doctors to work more closely with hospitals. Danielle L. Sreenivasan, MHA, senior manager with The Camden Group presents this detailed overview of strategies for the orthopedic service line that have already been successfully implemented in order to achieve the ACA’s mandates: quality excellence, population health management, efficiency, and cost savings.
42. Partner with hospitals
According to Alan Davidson [10], executive director of the Orthopedic Institute of Pennsylvania in Camp Hill "Gainsharing and co-management may be good strategies with hospitals." A large group practice makes a formidable partner for hospitals looking to enhance efficiencies and quality of care. The two can form a co-management agreement for running the orthopedic service line, which is attractive for both parties. “With co-management agreements, the hospital improves value, efficiency and outcomes while decreasing costs and complications; the physician group now has another income source from the agreement by sharing in the cost savings assuming they do a good job," Dr Kolisek says.
43. Collect for what you do upfront
Orthopedic surgeons may be shocked to discover how much it costs them to mail invoices to patients in order to get paid. Mail costs include the charges for printing invoices and envelopes, postage, staff time for calculating the bill, inserting the invoice into the envelope and following up on payment. On top of this, invoicing patients, rather than collecting co-payments at the time of service, results in payment delays and may have an impact on the practice’s cash flow.
44. Offer more ways to pay
The Camden Group advises that flexible payment arrangements such as tiered benefits, direct-to-employer arrangements, narrow networks and bundled payments are all likely to play a bigger role in patient referrals in future.
45. Know what you’re owed
Patients’ out-of-pocket costs are increasing. Your staff should know each patient’s payment responsibilities before the patient checks in. Dr Cox of CMO says that many patients may not be aware of what plans they qualify for, such as Medicaid, so practices should take the time to work with patients to help them figure that out.
46. Maintain up-to-date payer patient information
Before performing a procedure, ensure the patient's payer information is current and the patient is still paying for his or her insurance.
47. Notify patients ahead of payment expectations
It’s advisable that medical staff pre-screen patients and speak with them prior to arriving at the office so that patients are clear about their co-pay responsibility in order to ensure complete reimbursement. "It's important to provide a patient with a complete financial picture," Mr Love says. By taking these steps, patients and physicians can work together to arrange a payment schedule, and the chances of patients paying their co-pays upfront increase.
48. Ensure that staff are oriented towards collection
When booking appointments, sending reminders and welcoming patients to the surgeries it pays to be courteous, but direct about payment. Practices should work more closely with their front-desk staff members to brief them on all aspects of the billing cycle and collections process. Many practices are too focused on their payer reimbursement and Medicare to notice that the patient portion of healthcare payments is growing.
49. Automate collections wherever possible
Tools such as online portals can help to automate collection both before and after treatment.
50. Shorten accounts receivable days
Prompt payments boost the accounts; delayed payments can threaten profit margins. Keeping better track of the payment cycle each month will allow you to identify which accounts may need extra attention.
51. Know what pays well and what doesn’t
Although surgeries are often performed for less than they cost, contexts such as worker's compensation cases traditionally reimburse well for spine care. Kamshad Raiszadeh, MD [10], director of the Advanced Spine Institute of Alvarado Hospital in San Diego and a physician-owner of the Physicians Surgery Center, says many of his workers' compensation cases can be performed in the outpatient setting.
Surgeons can liaise with employers to create treatment plans that help employees get back to work sooner, which keeps the workers' compensation premium cost down.
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MANAGE STAFF
Health care is a team effort, so it pays to be mindful of the people helping your practice to become successful. Managing staff well can help your practice to thrive where others falter.
52. Invest in extra staff: Quality care requires dedication.
If your time is stretched it’s time to get help. "Some people think it's a waste of space and resources to hire extra personnel, but you want to invest in your resources," says Dr Levitz [4]. "You are better off having an extra nurse to develop a relationship with the patient and hire extra staff to deal with the administrative aspect of the practice."
53. Employ an assistant to improve the quality of your service
Levitz recommends hiring a physician's assistant (PA) to increase patient satisfaction. A good PA can attend to patients at less cost. They can listen to patient stories and brief the surgeon before their appointment. "You can bridge the quality gap with a good physician's assistant," says Dr Levitz.
54. And let your PA boost your profits
PAs can generate 2-3 times more income than they are paid, according to John Davis MBA [10], principal of Medical Practice Consulting, based in Bantam, US. In order to generate more revenue, Mr. Davis recommends PAs have their own schedules, treat patients and assist in surgery. "I recently worked with a practice whose two PAs were generating $250,000-$300,000 annually in collections," says Mr Davis "While not every PA can collect this, if you let them treat patients and assist in surgery, they can bring more than what they cost.
55. Reduce staff turnover
Good staff can run your practice the way you want it to be run, in line with your patient-centered care principles. They generally know what needs to be done and are more likely to go do it, quickly and effectively. “It makes sense to put resources into keeping (good staff) happy," says John Wipfler [8], CEO of OA-Centers for Orthopedics in Portland, Maine. "Pay is only the beginning and it doesn't need to be at the top of the scale. Respecting their wisdom, giving them a voice in the practice, having working committees with staff and creating many channels for hearing about what they are thinking and feeling. We want to keep morale up and be very transparent about what is happening in the practice. Enlist them in helping you solve your problems."
56. Hire spine-specific staff members
"You need to find staff who can hit the ground running," Lynn S. Feldman, RN, MBA [11], administrative manager of Eastwind Surgical, a two-OR ASC for spine surgery and pain management in Westerville, US. Your OR staff also need to be prepared to cope with irregular schedules. Spine surgeons may come in and do multiple cases in a day and then not come back for a week.
57. Hire ancillary staff
".. Athletic trainers can … promote a practice," says Curt Mayse [10], a principal with LarsonAllen. "If they offer services to local high schools and attend their sporting events, they can find a need in the community and act as a perfect marketing tool for the practice.”
58. Improve hiring practices to reduce staff turnover
High turnover rates are costly. Finding somebody to fill a position is not enough. New staff will also need to be a good fit for the practice. Nicola Hawkinson [9], CEO of SpineSearch, a recruitment and educational company, has found that clearly defined work roles and detailed job descriptions are essential for the long term profitability of any business. "Before hiring, a physician should identify gaps in the workplace and assess what is needed," Ms Hawkinson says. "This way, you won't end up hiring an office manager for $75,000 when you can hire a clerk for $35,000," she says.
59. Instigate an incentive-based administrative plan
It pays to give your administrator the opportunity to feel personally invested in your practice profitability. Incentive plans combined with realistic, measurable, attainable goals will help to motivate them to achieve maximum profitability.
60. Educate your staff
According to Ms Hawkinson [9], "if the staff doesn't have the knowledge they need to perform their duties, they will become easily frustrated and unproductive." Attending training courses can help staff to gain up to date business information that may not be widely known in the operating room, so it pays to check training needs at regular staff meetings. "Having staff attend these courses as a group shows that they are an important part of the practice and a part of a team”.
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MARKET YOUR BUSINESS
What good is an outstanding spine practice if nobody knows about it? Marketing may seem like a luxury, but in truth it may be the most important business investment you make. Spend wisely and it needn’t cost a fortune. Your priority is to target your marketing efforts effectively in order to increase your appeal with those who are actually in a position to help your practice grow.
61. Offer a great value, high quality service
In reality, we “market” ourselves daily as we care for our patients, who become our greatest ambassadors to potential new patients. In terms of the competitive value of your services, your on-going business profitability is determined as much by your outcomes and perceived quality of care, as how much it costs to provide these services.
62. Make marketing decisions
There are four different marketing aspects to consider: Ability, Availability, Affability, and Price. The hardest aspect to market is price, because it’s not always something you can control. Others can charge less than you do, but you have more control over the other three aspects. Ability refers not only to your skill but also to a special service that you offer. Affability should not be ignored, because your communication skills —as well as the behavior of your front office staff—can either build new patient relationships, or sabotage them. The easiest aspect to market, according to Grogan, is your “availability,” which may include offering after hours emergency care or Saturday clinics.
63. Convince patients who are “shopping around”
Patients want value for money and good health. You can win them over with testimonials, public awards and comparative value statistics.
64. Increase perceived value for cash-for-payment customers
When patients pay a premium up front they are more likely to expect first class touches like quality furniture, catering, extended consultations etc. These sorts of additions can add a lot of perceived value to your service, without necessarily blowing out your costs.
65. Use social media
Yellow pages ads might not work anymore…use social media , such as Twitter, Facebook, Linkedin, Google+ and local / regional websites to market yourself.
66. Know your market: Large group practices
It is recommended that large group practices direct their marketing efforts toward establishing a “brand” identification and marketing to referral physicians and other non-specialists, using print, radio, and television.
67. Know your market- Small group practices
Use similar approaches with referral physicians. Group practices may also consider adding locations near referral physicians’ offices and obtaining staff privileges at multiple hospitals to service the referral physicians.
68. Know your market- The solo practice
For the solo practitioner, the key to successful marketing is patient-to-patient marketing rather than referral physician marketing.
69. Extend referral sources
Remember to think outside the box. You can also source patients through emergency departments, chiropractors, podiatrists, sports teams, rehabilitation centers and health plan narrow networks [6].
70. Use marketing tools to brand your practice
Khawar Siddique, MD [8], a fellowship-trained spine surgeon with Beverly Hills Spine Surgery in California, recommends that practices find a way to signal their commitment to high level care. His group practices under the name 'Beverly Hills Spine Surgery' for that reason: "Beverly Hills denotes a quality of care," says Dr Siddique. "The name of your corporation should tell patients about the level of care you provide; such as Premier Spine Surgeons, Inc."
Highlight those aspects of your practice that make you special. For example, if you have received premier training, or awards for excellence, tout your expertise to help demonstrate that you are a quality health care provider.
71. Provide advice online
With so many of today’s patients shopping for services online, an authoritative, yet personable engagement in online forums and portals can build important, “new patient” networks.
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INVEST WISELY IN TECHNOLOGY
It’s too easy to spend money on new gadgets that look impressive, but don’t actually increase the quality, or value of your service.
72. Establish a patient portal
A usable interface for patients is likely to be a wise investment. Improved access to information can help your clients better understand their diagnoses and current health conditions (as long as that information is presented in a way that is usable and engaging). In turn, this can help you to communicate more effectively and efficiently with patients throughout their treatment.
73. Know what you need to do to achieve a good outcome
Researchers are making breakthroughs all the time. However, insurance companies often do not want to pay for advanced technology and may call it "experimental." The best solution for this impasse may well be patience.
"What often makes for a good outcome isn't the greatest and newest technique, but a good surgeon and motivated, healthy patient who undergoes a procedure without any complications," says Henry Finn, MD, FACS [13], medical director of the Chicago Center for Orthopedics at Weiss Memorial Hospital and professor of surgery at the University of Chicago.
74. Invest in robust information technology
Reported outcomes demonstrate your quality of care – and payers are starting to demand them, so it pays to automate as much as you can now. "Invest in information technology in a way that you can measure and report outcomes, whether to payers or hospital systems, to prove what you are doing," says Todd Albert, MD [8], spine surgeon and president of Rothman Institute in Philadelphia. "Be able to measure patient satisfaction as well. All these things are publicly reported, so know what they are and be ahead of the curve before your statistics end up in the newspaper."
75. Invest in efficient documentation
Speeding up long term electronic health records have also been shown to improve patient outcomes. EHRs designed specifically for orthopedic practitioners, with the documents you use most, are generally worth the investment because they can make the documentation process faster, increasing the number of patients a practice can serve.
Improving your practice’s bottom line may not necessarily be something you can achieve overnight, but it is something you can commit to right now.
“Everybody’s accountable now!” We spoke with US spine surgeon Alexander Vaccaro about the challenges faced by spine surgery practices when it comes to finding a profitable balance between patient load and reimbursements. It was reported a couple of years ago that a big concern facing orthopedic surgeons, particularly spine surgeons, was having to balance rising practice costs with declining reimbursements. Do you agree?There's been a global shift away from systems that reward volume, towards more emphasis on the quality and safety of treatment. In the past, the more procedures a surgeon performed, the more money they were paid. But, insurance companies and also the government started to pay less per procedure, so receipts started to go down. What do you do in that situation? Work harder? See even more patients? It is relatively easy to define volume with metrics, but how do you define quality treatment?Firstly, you have to set up metrics for quality; our office has many metrics that we initiated. The first is: re-admissions. If you do a surgical procedure, does the patient come back into the hospital? How many days does the patient stay in the hospital? How much does a procedure cost? These are all things that we look at and then we bring that back to the insurers and the payers to show that we can cost-effectively manage that patient. We also show that we can cost-effectively manage the patient nonsurgically using return to normal activity chartings and return to work schedules. At the same time the insurance companies are gathering all this information and using data analytic software to understand treatment effects and costs. What information do insurance companies collect about providers?Insurance companies know better than you do how a patient is recovering. They have your provider number and they know what you prescribe and how you manage someone. They know when you treat them non-operatively, for how long you treat them non-operatively and what type of medications you give them. They know if you are the type of doctor that likes to use narcotics, or avoids narcotics. It’s that precise. If they decide that you are a cost-effective provider, then you have an opportunity to negotiate with them. How can spine surgeons reduce their running costs?Once I figure out exactly what my costs are I can effectively negotiate with the insurance companies. I show them our groups metrics and then negotiate rates that are favorable for both the insurer and the provider. To make money you need to improve revenue and decrease costs, so we are constantly working to do that. At the Rothman Institute where I work, we do that through what we refer to as patient navigation, where we match a patient to appropriate resources. If a healthy, young patient had spinal surgery they generally do not have to go to rehabilitation and they can do home physical therapy. That saves the insurance company a lot of money. If it's an elderly patient, we make sure that they're medically optimized prior to surgery to decrease morbidity and then they are referred to an organized therapy program. We use very specific, data driven demand matching tools to make sure patients are using the least expensive resources to get them through the surgical experience. This extends to supportive care, because most of the money that goes into the cost of patient care occurs either before, or after surgery, managing pain and rehabilitation needs. Are there any other strategies in terms of organization, admission or patient flow that might secure financial improvements?The vast majority of costs for a spinal patient occur pre-operatively where they are exposed to extensive non-operative treatment such as medicinal management, physical therapy and epidural injections. Wherever appropriate we minimize expensive, invasive, non-operative procedures and then after surgery we make sure that we use the most appropriate resources to rehabilitate the patient. We take this information to the insurers to let them know that we value the most economically prudent care resulting in the best outcomes. What other organizational or management measures can make spine practice more profitable?If you do not work for a hospital system you have the opportunity to manage bundle payments. Bundle payments are becoming more common in the US. The bundle globalizes the cost of care for each treatment episode. If a patient comes to us and needs their spine operated on, we make an arrangement where the institution is compensated for care X amount of days before a procedure and X amount of days after the procedure. We work with anesthesia, physical therapy and other ancillary services to make sure excessive nonuseful care is not wasted. That's how an organization can protect their income. You must try to control the payment for the bundled fee. In the US, spinal surgeons can do that if they have a leadership role in managing the facility. We move surgical procedures that can safely be performed in an outpatient setting towards that alternative and we manage the care in that respect. So outside of what we charge for surgery, we also manage the entire care of the patient from pre-operative consultations through to the post-operative treatment plan. We also ensure cost based pricing to keep charges down. How do patients react to the new reimbursement system of bundled payment?They have questions. They're concerned about access and whether or not that access will be timely. Certainly they need to feel confident that they will still receive quality of care within a bundled payment system. If a patient can't make an appointment or has to wait an excessive time for an appointment they will naturally be upset and unhappy. As long as they have access to care when they need it, they’re happy. Equally, if certain insurance plans raise out of packet expenses that will act as a natural barrier to timely access. What would you advise a small practice to do to be more cost effective?Develop networks. The day of the individual practitioner is ending because it costs too much money to work alone, so surgeons have to develop partnerships with other practices. They can be an independent practitioner and have a separate tax ID number, but practitioners have to pool resources in terms of secretarial support, billing and collections. Individual practitioners have to do that in a group setting in order to spread risk and cost. What about safety? If someone says, “Ok. Make your practice more profitable,” isn’t there a risk that people will cut corners? How do we counter that?Safety is paramount. In fact the safer you make your practice, the more cost-effective it will be and the more money you will save. Safety goes hand in hand with quality. Both are essential aspects of a successful, profitable practice. What sort of trends do you see shaping the financial future of a spine practice?With patients assuming more of the responsibility of their cost, they are more likely to become educated consumers. The more financial risk they take on personally, the more they'll demand consistent, reproducible results. So take it from the perspective of the spine surgeon who will be faced with global payments for episodic care. They have to take the risk if a patient has a complication, so the surgeon assumes the cost of that risk. As a result they'll have to be very careful how they select someone for surgery. They have to optimize them medically and then they have to optimize their outcomes medically. The care paradigm will have to be modified because patients can't continue to pay surgeons every time they go back to a hospital center for the same problem, so that's what we're going to see in the future. Does this mean that there'll be less risk taken?It's a common observation that more risky patients will be carefully scrutinized and optimized medically before they are exposed to surgery. They'll end up going to Tier Three facilities for their care which are more expensive. Tier Three hospitals will care for the more complicated cases and insurance companies will assume more risk for their care. Less complicated medical illnesses will be managed in Tier One facilities which are less costly. At present there are Tier One, Tier Two and Tier Three facilities. Let's assume for the purposes of a global audience that a Tier One hospital is an inexpensive community hospital and a Tier Three is a university hospital. You'll have a patient navigator that will determine the optimal place for each patient to be, so if a patient has multiple co-morbidities, such as diabetes, coronary disease and COPD, they will be referred to a Tier Three facility and be subject to a different reinbursement structure. Big data will determine the complication rate, so if the complication rate is 14 per cent, the surgeon will be compensated for that extra risk. That will be accounted for in their payment rate, so everything will be guided by big data and payments will be discounted in accordance with the complexity of the problem. Is there the potential for patients with complicated back pain who can't afford surgery being stranded because nobody will take the risk?Chronic back pain that is not life threatening and without a neurologic deficit will be managed quite differently in the future. Unless there is robust evidence-based data to support expensive treatment options non-operatively and operatively access to those treatments will be difficult. The patient will have to take greater responsibility financially for their care. So even if there was a solution, like a surgical procedure that has a high probability to alleviate pain, you can't do that because nobody pays for it?If a solution for chronic back pain is supported by robust medical evidence than the patient will have access to it. If the surgeon is prepared to take the risk financially for the potential for failed treatment and the costs that incur and the patient is also prepared to do the same then it can happen, but each needs to agree to expose themselves to that risk. In other words you’re absolutely right, chronic conditions that may not have a good surgical solution are less likely to end up in the operating room. Was the situation very different before this new system?Before someone else covered the cost of expensive care without optimal outcomes. This created a moral hazard where there was no disincentive to continue to throw money at treatments that were found to be less effective than other treatment modalities. Insurers paid for unproven procedures without appropriate scrutiny, but now these choices are more likely to be questioned. Everybody’s accountable now! ____ABOUT Alexander Vaccaro MD, PhDAlexander is the Richard Rothman Professor and Chairman at the Department of Orthopedic Surgery and Professor of Neurosurgery at Thomas Jefferson University in Philadelphia, Pennsylvania. He is also the President of the Rothman Institute. He is the Chairman of the AOSpine Knowledge Forum on Spinal Trauma that developed a unified TL classification system—the AOSpine Classification for Traumatic Fractures of the Thoracolumbar Spine.
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The articles included in the Newsletter represent the opinion of the individual writer exclusively and not necessarily the opinion of AOSpine.
