During a breakout session at the practice management workshop, AAOS Board members and members of the Practice Management Committee discussed potential future offerings, including office design assistance and affinity programs. (Clockwise, from lower left) Joseph D. Zuckerman, MD; William J. Robb III, MD; Frank B. Kelly, MD; Dale Reigle, CPHIT, MS; Robert H. Haralson III, MD, MBA; Frederick M. Azar, MD; Charles E. Rhoades, MD; Michelle M. Zembo, MD, MBA (hidden), and Kevin J. Bozic, MD, MBA.


Published 1/1/2009
G. Jake Jaquet

The business of orthopaedics takes center stage

AAOS Board focuses on practice management

AAOS First Vice-President Joseph D. Zuckerman, MD, opened the December 2008 Board workshop on practice management by saying, “Education is the Academy’s primary mission, but that mission has to be integrated with member needs. And members realize that practice management is an important—and often overlooked—aspect of their education.”

Orthopaedic surgeons “in the trenches”
Panelists Thomas J. Grogan, MD (solo); Charles E. Rhoades, MD (small/medium group); Frank A. Pettrone, MD (large group); and Michele M. Zembo, MD, MBA (academic) shared their perspectives on the strengths, weaknesses, opportunities, and threats facing their particular practice setting.

As might be expected, regardless of the type of practice, concern for balancing patient care and economic realities was a common thread. Most panelists cited the following threats: declining reimbursements, changes in regulations, new legislation affecting practice processes, and encroachment by hospitals into labor pools and patient bases. Panelists also expressed concern that new surgeons have different priorities than those further along in their careers, with new surgeons placing more emphasis on personal goals.

The business of orthopaedics
William Jessee, MD, FACMPE, president of the Medical Group Management Association, shared practice-related business information collected by his organization. He reviewed key business issues such as shrinking reimbursements, slower payments, rising operating costs, reduced demands for elective procedures, growing tensions with hospitals, and increasing numbers of uninsured and underinsured patients.

For example, he noted that single specialty orthopaedic groups spent an average of 52 percent of gross revenues on operating costs in 2007. While operating costs have risen more than 40 percent during the past 7 years, Medicare payments have essentially remained flat.

To overcome these hurdles, Dr. Jessee said, practices need to “stop the bleeding” by improving charge capture, benchmarking coding and production, reducing first-pass claims denials, increasing patient collections, reconciling explanations-of-benefits to contracts, and reducing administrative inefficiency. Implementation of new technology, such as picture archiving and communication and electronic medical record systems will assist orthopaedists in these arenas.

Potential additional revenue streams include adding ancillary services, offering complementary and alternative medicine, and even providing non-insured services—“Maybe even open a gym,” he concluded.

Plan for success
Douglas W. Jackson, MD,
AAOS past president, outlined several strategies for members to consider. He suggested that orthopaedic surgeons who plan to continue practicing in hospitals begin to pursue a “best provider” model as part of a “best provider team.” Although “best provider” has not been clearly defined, said Dr. Jackson, these individuals “will need to demonstrate some agreed-upon measures of treatment outcomes and patient management success.”

Private practice is becoming less attractive, said Dr. Jackson, due to the pressures of rising costs and declining reimbursements. Although modern technologies can be of significant benefit in running a private practice efficiently and effectively, outsourcing (or, sometimes, time-sharing) can often be more helpful. For example, outsourcing billing may result in greater efficiencies and reduce the need for in-house training and office space.

Dr. Jackson also suggested that private practitioners could benefit from offering ancillary services—even non-medical services. “Think outside the box,” he advised; a practice with a flow of more than 250 patients per day, in a location with potential customers from a surrounding area, could open a coffee shop.

Another option would be applying the concept of “concierge” medicine to orthopaedics. In this arrangement, patients pay an annual fee or retainer in return for an enhanced physician-patient relationship, such as the access to the physician via cell phone or email at any time of day or night.

“AAOS cannot insure that all orthopaedic surgeons will find financial success in their private practices, but it can help level the playing field,” he concluded. “Physicians, as a rule, are not businessmen and businesswomen. All of us would rather just show up and take care of patients. But the responsibilities and efforts necessary to run a small business are becoming increasingly onerous, and failure brings with it serious consequences.

“The demographics of the membership are changing. Younger people think differently than I did, and want different things than I did. It is a dilemma. We want assistance and options, but we still have to meet the needs of society and our responsibilities to our patients.

“I think that private practice as we’ve known it will be significantly different in the next few years.”

Life on the firing line
According to Dale Reigle, CPHIT, MS, president of the American Association of Orthopaedic Executives (formerly BONES), a practice executive is both “in the trenches” and “behind the scenes.” Like a quartermaster, he or she provides logistical support. The practice manager also has the responsibilities of an intelligence section, providing tactical information, and fulfills the role of a personnel division for training and deploying staff.

He likened the practice manager’s office to a command center, wherein strategies are developed, activities are directed, battles are assessed, and redeployments are made as needed.

With such varied responsibilities, a practice executive must have several competencies—from financial modeling and reporting to contracting and facilities management. Interactions between physicians and practice executives may be especially challenging, particularly in multi-generational physician groups with varied points of view.

Consequently, the most important aspect of the relationship between physicians and their practice executives is honest and constructive feedback. The most common problems, he noted, occur when physicians attempt to micromanage or fail to support the decisions their practice executives are in theory empowered to make.

His final piece of advice in hiring a practice manager was to “find someone who loves the job!”

What’s next for the AAOS?
After Stephen P. Makk, MD, MBA, chair of the AAOS Practice Management Committee, presented an overview of current and planned practice management initiatives, AAOS staff members reviewed the results of a benchmark survey comparing the Academy’s offerings to those of other national medical associations and a member survey on practice management issues.

Three breakout discussion groups focused on identifying potential initiatives that might warrant greater review by AAOS. The following areas of consensus were identified:

  • Educating residents regarding practice management
  • Helping members make informed decisions regarding how best to implement new technology
  • Partnering with third parties to implement cost-saving initiatives

As a follow-up to this workshop, another Board workshop on practice management will be held in May, with reports on the identified areas of study and discussion on further effort and initiatives.

“Providing practice management education is important,” concluded Dr. Zuckerman, “and enhancing the quality of practice life for our members is the goal.”

G. Jake Jaquet is executive editor of AAOS Now. He can be reached at jaquet@aaos.org