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Peter J. Mandell, MD

AAOS Now

Published 9/1/2012
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Madeleine Lovette

AAOS Fellows Testify before Congress

Explain how evolving healthcare system is affecting orthopaedic practices

Changes in the ever-evolving U.S. healthcare delivery system can be attributed to a variety of economic, political, technologic, and demographic factors. Policymakers, therefore, are dependent on physicians to communicate how healthcare policy reforms and health system realignment have affected their practices and what alterations need to be made to improve care delivery. Recently, two fellows of the American Association of Orthopaedic Surgeons (AAOS) testified before Congress on exactly those topics.

Solo practice declines
Today, many physicians are forgoing private practice to become hospital employees. In fact, according to the national consulting firm Accenture, by 2013, only 33 percent of physicians are projected to own their own practice, down 24 points from 2000. To gain more insight on this trend and the impact it may have on delivering quality care to patients, the U.S. House of Representatives Small Business Subcommittee on Investigations, Oversight and Regulations invited representatives from several physician groups, including the AAOS, to testify at a hearing titled Health Care Realignment and Regulation: The Demise of Small and Solo Medical Practices on July 19, 2012.


Louis F. McIntyre, MD

Representing the AAOS, Louis F. McIntyre, MD, a former member of a group practice, told the subcommittee that increasing administrative and regulatory burdens from the American Recovery and Reinvestment Act (ARRA) and the Patient Protection and Affordable Care Act (PPACA), coupled with decreasing reimbursements, forced the members of his New York–based private practice to join a hospital group.

“The combination of decreased reimbursement, increased reporting requirements, the need for huge outlays for technology improvements, and uncertainty about future earning potential are driving private practice physicians to seek employed positions,” Dr. McIntyre said. “Doctors cannot take care of patients and, at the same time, meet all of the demands placed upon them, especially in an environment of shrinking revenues and increasing costs.” 

Dr. McIntyre and other panelists also noted that medical liability insurance costs, student loans, and quality of life considerations have contributed to the decline in private practice.

Pros and cons of hospital employment
New demands from ARRA and PPACA are expected to accelerate the increase in employed physicians. The subcommittee asked panelists about the impact this would potentially have on patients.

According to Dr. McIntyre, the employed model can be advantageous to both physicians and patients. Doctors have more financial security knowing exactly what their income will be, they no longer have to worry about losing money when caring for the uninsured and underinsured, and they are freed from dealing with human resource issues, regulatory burdens, and information technology costs, which become the purview of their employer.

However, Dr. McIntyre and his fellow panelists noted potentially negative consequences of an employment model-only approach, specifically for the physician-patient relationship. According to Dr. McIntyre, it is much easier for a patient to see the same physician in a private practice setting, and it is also easier for physicians to address patient complaints and deficiencies in the practice.

“In my practice, I had a great ability to affect the atmosphere of the business because I owned it. If issues were brought to my attention, that we were deficient in some area, then you can be sure we changed that,” he said. “Now, I’m not responsible for the policy of the practice, the hospital is; so, I’m a little bit hamstrung to affect those policies.”

A representative from the American Osteopathic Association (AOA) also told the committee that, unlike in a practice setting, the hospital employment model does not encourage an environment where a physician will stay late in order to fit a patient into the schedule. As a result, many employed osteopathic surgeons see fewer patients during the week than they had in private practice.

In addition to the potential negative impacts on access and the physician-patient relationship, a decline in private practice could also have an economic impact. Dr. McIntyre cited findings from a 2009 study conducted by the Medical Society for the State of New York that showed the private practice of medicine was the fifth largest employer in his county, second in business establishments, third in personal income taxes paid, and seventh in corporate sales taxes paid. As a part of a hospital, however, his practice is tax exempt in all those categories.

“Private practice is a significant economic engine employing vast numbers of people and paying taxes to support government services,” said Dr. McIntyre. “The loss of tax revenue resulting from private practice physicians migrating to hospital employment may be significant and worthy of further study.”

Peter J. Mandell, MD

Dr. McIntyre concluded his testimony by urging Congress to enact policies that strengthen private practice as well as encourage other models of healthcare delivery to ensure that patient access to care and other aspects of quality healthcare delivery do not suffer.

Quality and the Medicare payment model
Also in July, Peter J. Mandell, MD, chair of the AAOS Council on Advocacy, testified before a House Ways and Means Health Subcommittee on provider perspectives on Medicare payment reform quality initiatives. Dr. Mandell joined representatives from the American Gastroenterological Association, the American College of Physicians, and the American College of Physician Executives, among others.

According to subcommittee chairman, Rep. Wally Herger (R-Calif.), the subcommittee has been seeking formal and informal input from the physician community on how to reform the Medicare payment system so that “quality, efficiency, and patient outcomes are accounted for in a fair and fiscally responsible manner.”

“This committee must do more than simply repeal the Sustainable Growth Rate formula; we need to work with physicians to develop payment models that preserve and promote the physician patient relationship,” said Rep. Herger. “It is my hope that we can learn from and build upon your efforts to develop a 21st century payment model.”

The orthopaedic perspective
Dr. Mandell’s testimony illustrated how the quality efforts of the AAOS can be incorporated into payment reform.

“The AAOS has worked hard to develop several quality programs that can easily be adopted by Congress. These initiatives include the development of clinical practice guidelines, appropriate use criteria, our joint registry program, and patient safety measures,” said Dr. Mandell. “Quality improvement tools can contribute to the new payment system by telling physicians and payers what procedures provide the best value to patients.”

He clarified, however, that although the AAOS supports the correct application of guidelines and other quality tools into coverage policies, it will be diligent in responding to payers who misinterpret or misapply AAOS guidelines.

Dr. Mandell advised the committee that any new payment model developed by the federal government should focus on financial incentives that reward higher quality care. He emphasized that these incentives should be appropriately risk adjusted to protect patient access to care.

“Coordinated care models, such as bundled payments, and other models that provide financial incentives for providing higher quality care, could result in a more integrated and efficient healthcare delivery system,” said Dr. Mandell. “However, these incentives must be risk adjusted to account for the medical, social, and personal patient factors that are beyond a provider’s control, such as poor nutrition, tobacco and alcohol use, and noncompliance with treatment recommendations.”

When asked to clarify why risk adjustment is important, Dr. Mandell explained that if payments were based on patient outcome alone, without risk adjustment, access to care for sicker patients could be jeopardized as providers would be inclined to ‘cherry pick’ healthier patients whose outcome is more predictable.

“The fact that physician organizations have developed so many innovative clinical improvement activities gives me increasing hope that Medicare can build on these efforts and we can find the long-term solution that has been so elusive,” said Rep. Sam Johnson (R-Texas), in the hearing’s closing statement. “I appreciate the physician leadership exemplified by our witnesses because this reform effort can’t succeed without active participation by the physician community.”

Madeleine Lovette is the communications specialist in the AAOS office of government relations. She can be reached at lovette@aaos.org

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