Here are eight steps to boost profitability at your spine practice from spine surgeons and industry experts.
1. Partner or merge with others for increased profitability. With reimbursements decreasing and provider costs for technology and healthcare reform upgrades increasing, it's a lot more economical for private practice physicians or small group physicians to join a larger practice than to strike out on their own, says Daniel Murrey, MD, MPP, a spine surgeon and leader with OrthoCarolina. Larger practices have the access to capital and negotiating structure with hospitals and payors that can help individuals increase their profitability. These partnerships also benefit the larger practice because the mergers spread fixed costs across a larger group of shareholders. It also standardizes care delivery by the practices, which drives down healthcare costs. "We continue to see opportunities to partner with like-minded orthopedists and hospitals that share our strategic goals," he says. "In many cases, both sides benefit substantially."
However, make sure there is a comfort level between both groups before the partnership occurs. Don't merge with an unfamiliar practice or someone who is new to the area until you know they will fit within the practice culture. All of the merging practices with OrthoCarolina were longstanding referral partners of the physicians.
2. Use marketing tools to brand your practice. Surgeons must market their private practices to drive patient volume and promote brand recognition. Khawar Siddique, MD, a fellowship-trained spine surgeon with Beverly Hills Spine Surgery in California, says it's important for practices to have a moniker that reflects their commitment to high level care, which is why his group decided to practice under the name "Beverly Hills Spine Surgery."
"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."
Focus on any aspects that make your group special in your marketing efforts. For example, if your group includes all fellowship-trained spine surgeons, tout your expertise to show you are a quality organization.
3. Hold strategy meetings with employees of all levels for brainstorming. At the quarterly strategy meetings, the Virginia Spine Institute gathers employees from all levels of the organization to discuss what the current initiatives from each department and how they can improve. "These meetings build ownership by the employees of the organization," says Thomas Schuler, MD, a spine surgeon and founder of the Virginia Spine Institute in Reston. If your philosophy is to be more inclusive rather than exclusive it has a direct effect on participation and buy in with changes and improvements to processes and procedures.
In the strategy meetings, the participants discuss a diverse range of topics, including the perceptions or misperceptions of patients at the practice and issues among employees. At one meeting, the Practice Administrator decided to revamp the organization's healthcare benefits because employees were unhappy with that aspect of their compensation. Changes in the way information is disseminated to patients, the process for checking patients in and out of the clinic and how employees are educated at the clinic occurred as a result of these meetings.
4. Develop additional ancillary service lines. Right now, the surgeons at Sonoran Spine Center accept any case almost regardless of the payor, which means accepting Medicare patients. Managed care plans continue to drop their rates, significantly decreasing profitability on those cases. Medicare reimbursement has been in a constant state of flux, with Congress threatening to dramatically decrease payments to physicians. As a result, Dennis Crandall, MD, who now serves as the practice president and CEO and his partners are exploring ancillary services as a new way to bring revenue into the group. Sonoran Spine Center currently includes an in-house X-ray and physical therapy.
"Most practices have an X-ray, but since we do a lot of spinal deformity cases we have a machine that allows us to shoot 18x36 inch long spine films," Dr. Crandall says. "That's something that can't be done at just any outpatient radiology center, so we brought it in-house."
When it was time to bring in physical therapy, Dr. Crandall was initially skeptical of its profitability because overseeing the collection of $10-$20 copays can be onerous; the office staff spend time tracking down these small payments, which may not amount to much value. However, soon after incorporating those services the profitability became clear.
"It really has been a good, revenue positive decision to add physical therapy," he says. "We have tight control on the therapists and how the therapy is delivered. Our communication between the physicians' and therapists' offices is fantastic, which makes working together with a patient so much easier."
Now, when Dr. Crandall recommends therapy for the patient, he can call a therapist into the office to the office during the patients' visit to discuss their treatment plan. This boutique level of care projects a positive image of the practice with highly integrated care.
5. Aggressively negotiate with insurance companies. When going through negotiations with payors, make sure to hold your ground on your prices.
"The worse thing surgeons can do is undercut others by lowering their prices," says Dr. Siddique. "For example, if surgeon X goes to United and charges half as much as surgeon Y, they'll cut the rates for surgeon Y as well. Surgeons must be aggressive and not undercut each other. If you negotiate a bad contract, you have to work twice as hard for your income and the quality of your work will drop."
By going out-of-network, Dr. Siddique says surgeons can signal their outcomes have higher quality than others and demand a fair price. "You can't gouge patients or payors for the procedure, but you don't want to undercut others and lower prices either," he says. "If you are a surgeon from a small town without much competition, you must demand more from commercial payors because you have a position of leverage."
Spine surgeons can also become part of a group to leverage better negotiations with insurance companies. However, you must be part of a group in order to collectively bargain. "Surgeons are prohibited from joining unions, so if you are not part of a group you can't collude with other surgeons about the price for procedures," says Dr. Siddique. "However, if you are in a group all under the same tax ID, you can negotiate for better deals with insurance companies."
6. Strike a balanced payor mix. With declining reimbursement rates across the board, spine practices must analyze their payor mix and figure out how to recruit more profitable cases. For Sonoran Spine Center, this means doing an appropriate number of other cases, including workers' compensation cases, to balance Medicare rates. Workers' compensation cases pay higher rates than other cases, partially because there is extra work the physicians and specialists must complete for each episode of care. Some practices focus solely on workers' compensation cases — which is one example of an effective business model, but not one Sonoran Spine Center aspires to achieve.
"We don't want to do entirely workers' compensation cases, but we do want a good level of workers' compensation in our payor mix," says Dr. Crandall. "With that higher reimbursement, we can become more efficient."
However, if Medicare cases continue to decline at an unsustainable rate, spine practices may need to drop those cases in the future to stay profitable. "We haven't closed the door on Medicare patients yet because we feel it's important to care for this population," says Dr. Crandall. "However, we can't follow Medicare if rates keep declining. Many of our colleagues have already decided they can't see Medicare patients."
7. Focus on creating a positive culture inside and outside of the practice. Success for your business in a competitive market depends upon differentiating you product from others on the shelf. The same rings true for orthopedic practices. When launching their practice, the original Rothman partners were keenly aware of this concept. "In order to be a sustained leader in our market, we had to differentiate ourselves," says Alexander Vaccaro, MD, PhD, a spine surgeon and one of the founding partners of Rothman Institute. "Instead of just being the best surgeons clinically, we had three additional criteria our partners strove to meet: we had to be clinically productive, a good citizen and active in academic work."
Maintaining clinical productivity meant the surgeons were seeing an appropriate patient volume and optimizing their time; being a good citizen meant respecting all employees, being a team player and contributing to the positive culture at the practice; having a focus on academics meant the surgeons were also required to research and write papers, deliver lectures at professional meetings and participate in community events such as sitting on the sidelines at youth sporting activities.
"You can't just be a productive orthopedic surgeon because everyone does that, and their practices can still fail," says Dr. Vaccaro. "If you give back to the community and participate academically, that's different."
8. Become involved with community events. Since it is important for a spine center to have patients and make a profit, external marketing is necessary. One method is to gain exposure for the practicing physicians.
"Consider what organizations or societies in your community physicians should be involved with. Organizations like the chamber of commerce or non-profits," says Stephen Hochschuler, MD, founder of Texas Back Institute in Plano. "Look into areas of children education, sports and disadvantaged individuals. You have to keep your eye on everything."
Physicians that become involved with community groups may not only meet potential patients but also other physicians who could drive patient volume through referrals. Relationships are integral for acquiring patient referrals and driving patient volume whether those relationships are community or medical based.
More Articles on Spine Surgeons:
5 Spine Surgeons on the Individual Mandate's Impact
5 Spine Surgeons on the Biggest Challenges in Spine Surgery Today
7 Spine Surgeons on Implant Reps in the Operating Room
1. Partner or merge with others for increased profitability. With reimbursements decreasing and provider costs for technology and healthcare reform upgrades increasing, it's a lot more economical for private practice physicians or small group physicians to join a larger practice than to strike out on their own, says Daniel Murrey, MD, MPP, a spine surgeon and leader with OrthoCarolina. Larger practices have the access to capital and negotiating structure with hospitals and payors that can help individuals increase their profitability. These partnerships also benefit the larger practice because the mergers spread fixed costs across a larger group of shareholders. It also standardizes care delivery by the practices, which drives down healthcare costs. "We continue to see opportunities to partner with like-minded orthopedists and hospitals that share our strategic goals," he says. "In many cases, both sides benefit substantially."
However, make sure there is a comfort level between both groups before the partnership occurs. Don't merge with an unfamiliar practice or someone who is new to the area until you know they will fit within the practice culture. All of the merging practices with OrthoCarolina were longstanding referral partners of the physicians.
2. Use marketing tools to brand your practice. Surgeons must market their private practices to drive patient volume and promote brand recognition. Khawar Siddique, MD, a fellowship-trained spine surgeon with Beverly Hills Spine Surgery in California, says it's important for practices to have a moniker that reflects their commitment to high level care, which is why his group decided to practice under the name "Beverly Hills Spine Surgery."
"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."
Focus on any aspects that make your group special in your marketing efforts. For example, if your group includes all fellowship-trained spine surgeons, tout your expertise to show you are a quality organization.
3. Hold strategy meetings with employees of all levels for brainstorming. At the quarterly strategy meetings, the Virginia Spine Institute gathers employees from all levels of the organization to discuss what the current initiatives from each department and how they can improve. "These meetings build ownership by the employees of the organization," says Thomas Schuler, MD, a spine surgeon and founder of the Virginia Spine Institute in Reston. If your philosophy is to be more inclusive rather than exclusive it has a direct effect on participation and buy in with changes and improvements to processes and procedures.
In the strategy meetings, the participants discuss a diverse range of topics, including the perceptions or misperceptions of patients at the practice and issues among employees. At one meeting, the Practice Administrator decided to revamp the organization's healthcare benefits because employees were unhappy with that aspect of their compensation. Changes in the way information is disseminated to patients, the process for checking patients in and out of the clinic and how employees are educated at the clinic occurred as a result of these meetings.
4. Develop additional ancillary service lines. Right now, the surgeons at Sonoran Spine Center accept any case almost regardless of the payor, which means accepting Medicare patients. Managed care plans continue to drop their rates, significantly decreasing profitability on those cases. Medicare reimbursement has been in a constant state of flux, with Congress threatening to dramatically decrease payments to physicians. As a result, Dennis Crandall, MD, who now serves as the practice president and CEO and his partners are exploring ancillary services as a new way to bring revenue into the group. Sonoran Spine Center currently includes an in-house X-ray and physical therapy.
"Most practices have an X-ray, but since we do a lot of spinal deformity cases we have a machine that allows us to shoot 18x36 inch long spine films," Dr. Crandall says. "That's something that can't be done at just any outpatient radiology center, so we brought it in-house."
When it was time to bring in physical therapy, Dr. Crandall was initially skeptical of its profitability because overseeing the collection of $10-$20 copays can be onerous; the office staff spend time tracking down these small payments, which may not amount to much value. However, soon after incorporating those services the profitability became clear.
"It really has been a good, revenue positive decision to add physical therapy," he says. "We have tight control on the therapists and how the therapy is delivered. Our communication between the physicians' and therapists' offices is fantastic, which makes working together with a patient so much easier."
Now, when Dr. Crandall recommends therapy for the patient, he can call a therapist into the office to the office during the patients' visit to discuss their treatment plan. This boutique level of care projects a positive image of the practice with highly integrated care.
5. Aggressively negotiate with insurance companies. When going through negotiations with payors, make sure to hold your ground on your prices.
"The worse thing surgeons can do is undercut others by lowering their prices," says Dr. Siddique. "For example, if surgeon X goes to United and charges half as much as surgeon Y, they'll cut the rates for surgeon Y as well. Surgeons must be aggressive and not undercut each other. If you negotiate a bad contract, you have to work twice as hard for your income and the quality of your work will drop."
By going out-of-network, Dr. Siddique says surgeons can signal their outcomes have higher quality than others and demand a fair price. "You can't gouge patients or payors for the procedure, but you don't want to undercut others and lower prices either," he says. "If you are a surgeon from a small town without much competition, you must demand more from commercial payors because you have a position of leverage."
Spine surgeons can also become part of a group to leverage better negotiations with insurance companies. However, you must be part of a group in order to collectively bargain. "Surgeons are prohibited from joining unions, so if you are not part of a group you can't collude with other surgeons about the price for procedures," says Dr. Siddique. "However, if you are in a group all under the same tax ID, you can negotiate for better deals with insurance companies."
6. Strike a balanced payor mix. With declining reimbursement rates across the board, spine practices must analyze their payor mix and figure out how to recruit more profitable cases. For Sonoran Spine Center, this means doing an appropriate number of other cases, including workers' compensation cases, to balance Medicare rates. Workers' compensation cases pay higher rates than other cases, partially because there is extra work the physicians and specialists must complete for each episode of care. Some practices focus solely on workers' compensation cases — which is one example of an effective business model, but not one Sonoran Spine Center aspires to achieve.
"We don't want to do entirely workers' compensation cases, but we do want a good level of workers' compensation in our payor mix," says Dr. Crandall. "With that higher reimbursement, we can become more efficient."
However, if Medicare cases continue to decline at an unsustainable rate, spine practices may need to drop those cases in the future to stay profitable. "We haven't closed the door on Medicare patients yet because we feel it's important to care for this population," says Dr. Crandall. "However, we can't follow Medicare if rates keep declining. Many of our colleagues have already decided they can't see Medicare patients."
7. Focus on creating a positive culture inside and outside of the practice. Success for your business in a competitive market depends upon differentiating you product from others on the shelf. The same rings true for orthopedic practices. When launching their practice, the original Rothman partners were keenly aware of this concept. "In order to be a sustained leader in our market, we had to differentiate ourselves," says Alexander Vaccaro, MD, PhD, a spine surgeon and one of the founding partners of Rothman Institute. "Instead of just being the best surgeons clinically, we had three additional criteria our partners strove to meet: we had to be clinically productive, a good citizen and active in academic work."
Maintaining clinical productivity meant the surgeons were seeing an appropriate patient volume and optimizing their time; being a good citizen meant respecting all employees, being a team player and contributing to the positive culture at the practice; having a focus on academics meant the surgeons were also required to research and write papers, deliver lectures at professional meetings and participate in community events such as sitting on the sidelines at youth sporting activities.
"You can't just be a productive orthopedic surgeon because everyone does that, and their practices can still fail," says Dr. Vaccaro. "If you give back to the community and participate academically, that's different."
8. Become involved with community events. Since it is important for a spine center to have patients and make a profit, external marketing is necessary. One method is to gain exposure for the practicing physicians.
"Consider what organizations or societies in your community physicians should be involved with. Organizations like the chamber of commerce or non-profits," says Stephen Hochschuler, MD, founder of Texas Back Institute in Plano. "Look into areas of children education, sports and disadvantaged individuals. You have to keep your eye on everything."
Physicians that become involved with community groups may not only meet potential patients but also other physicians who could drive patient volume through referrals. Relationships are integral for acquiring patient referrals and driving patient volume whether those relationships are community or medical based.
More Articles on Spine Surgeons:
5 Spine Surgeons on the Individual Mandate's Impact
5 Spine Surgeons on the Biggest Challenges in Spine Surgery Today
7 Spine Surgeons on Implant Reps in the Operating Room