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Published 5/1/2011
Richard J. Barry, MD

Back from the brink?

Lessons orthopaedists need to learn—now!

“The Death of an Orthopaedic Group” (AAOS Now, April 2011) was both disturbing and timely. I believe that all orthopaedists are, to some degree, at risk for extinction as the economic conditions of orthopaedic practice become increasingly unfavorable. Because my partners and I have recently struggled to bring our group back from the edge of economic oblivion, I believe that Dr. Garroway’s cautionary tale should be widely heeded and provides a number of lessons.

It’s a new world
The first lesson is that “This is not your father’s business environment.” Most orthopaedists who have been in practice for several years learned business principles by long experience in a stable, generally fair, economic environment far different than the current conditions of rapidly increasing tensions between uncontrolled expenses and unstable reimbursements. The significant practice changes expected for electronic medical records (EMRs) adoption and other government programs are very expensive and have weakened our ability to withstand business inefficiency.

An economic study of the Physician Group Practice Demonstration (a model for the Accountable Care Organization concept) conducted by the Centers for Medicare & Medicaid Services showed that a 5-year timeframe required a minimum break-even margin of 13 percent to offset the average initial investment of $1.7 million necessary for participation. None of the participating groups broke even; less than half qualified for any incentive payments.

Over the past few years, our small group (three orthopaedic surgeons and two physician assistants) has spent more than $120,000 on EMRs and claims submission. We are unlikely to recover those costs, and the expense has not improved our bottom line. Those of us practicing in specialty areas such as spine, adult reconstructive surgery, and trauma—which are more resource- and workload-intensive—require more staff and supplies to provide quality orthopaedic service than the primary care community will ever realize. All stakeholders must recognize that the provision of quality orthopaedic care is a business far larger than the individual provider who receives the reimbursement.

Knowledge is power
This is the second lesson. Community orthopaedic practices are like individual rafts on a storm-tossed sea when they should resemble a modern steel-hulled fast frigate, turning into the threat and aggressively defending the value of orthopaedic professional services. But without information about the fair market value for those services, a practice may settle for an unsustainable contract.

We learned this from a recently hired senior billing supervisor who identified the differences in rates between our contracts and those for other orthopaedic groups in the area. Yet, if I had discussed this issue with a colleague, we could be accused of ‘engaging in uncompetitive activity.’ To survive as an independent profession, orthopaedists must have the opportunity to negotiate based on market knowledge of the value of our professional services.

Identifying the problem
“If you think things are going well, you don’t understand the problem.” Physicians are not experts in assessing business efficiency. Because our patients place absolute trust in us, and we in them, we are entirely too quick to assume that those who work around us exercise that same level of trust. The physicians in my practice trusted staff and focused on medicine, even as the practice began to crumble around us.

To identify practice-threatening business problems, have frequent audits conducted by professionals outside the practice.

By regularly and thoroughly ‘deconstructing’ the practice, looking at a small segment at a time, you will be able to find signs of malfunction well before they develop into a catastrophic failure. This is the business practice of continuous quality improvement.

Large groups may be able to benchmark through a regional practice forum, but small groups must develop more efficient methods to communicate and share practice performance data. A recent review of the management of our group’s physician’s assistants uncovered potential compliance issues with new state professional regulatory and tax code requirements. Although practice audit and process investigation processes are costly, ignorance is much more expensive.

Interdependence is essential
It’s not just the failure or inability of ‘older’ surgeons to increase their individual productivity that contributes to failure. We ALL bring value to our practice organizations. As more senior orthopaedic surgeons begin to experience disabilities and limit their surgeries, increasing numbers of physicians are retiring or leaving practice in response to the evolutionary pressures of economic survival. The economic failure and loss of even one highly skilled, thoroughly experienced, quality orthopaedic surgeon from our ranks diminishes us all.

It is time that we act in concert to demand sustainable reimbursement for professional services. We must be able to share economic information. Whether $948.21 for a lumbar decompression surgery (code 63030) is sustainable for your practice is a decision that only you can make, but you must have comparative data upon which to make an intelligent business decision.

We face an increasing potential for economic failure no matter what the size of our practice. Falling margins have weakened our practices, making them more likely to fail. Let us spare no effort in stimulating united advocacy and individual activism on the behalf of an economically sustainable environment for the profession of orthopaedic surgery!

Richard J. Barry, MD, is the immediate past chair of the Board of Councilors. He can be reached at