Published 2/1/2013
Gregory S. McDowell, MD

State Societies and Hospital-Employed Orthopaedists

Gregory S. McDowell, MD

Hospital employment of orthopaedists may have some significant implications for orthopaedic state societies. The first inklings of the impact of hospital employment on state societies came during the Board of Councilors’ (BOC) 2008 fall meeting, when Thomas C. Barber, MD, and Matthew S. Shapiro, MD, presented data from state surveys in Oregon and California that suggested that state society participation was not a high priority for hospital-employed orthopaedic surgeons.

At the 2010 BOC fall meeting, Kevin J. Bozic, MD, MBA, moderated an excellent symposium on “Vertically Integrated Healthcare Delivery,” which included a question to the audience on their employment status. Within this leadership group (BOC members and Board of Specialty Society participants), 72 percent were not hospital employees. In fact, a longitudinal review of AAOS census data suggests that most U.S. orthopaedic surgeons are not hospital employees. According to the AAOS primer on “Hospital Employment of Orthopedic Surgeons,” only 500 of 5,000 accredited hospitals have a “bona fide orthopaedic employment program.”

To better understand the issues surrounding hospital employment of orthopaedists, the AAOS marketing department, working with the BOC, developed a three-phase survey plan, which was implemented and completed last year. The results of the final survey were presented at the 2012 BOC fall meeting and a link to them can be found in the online version of this article.

Healthcare reform
The writing is on the wall. Big government is legislating healthcare reform for everyone. Current policies strongly advocate for and support integrated health systems. Most orthopaedists, however, are not hospital-employed or members of vertically integrated systems. They are small business owners—hardworking individuals and groups of individuals in single or multispecialty orthopaedic practices who are encountering strong upstream currents and unlevel playing fields.

Employed physicians may well earn more than their collections allow. Employers may accept losses on their medical practice divisions, sometimes multi-million dollar losses, because they are able to make up the losses with downstream revenues from facility fees, plain film imaging, advanced imaging, laboratory testing, durable medical equipment, and therapy charges. According to the AAOS primer, integrated healthcare systems can offer income guarantees, sometimes “200 percent of those from the private practices in the region.” This gives them a competitive recruiting advantage.

As small business owners, orthopaedists seek to level this unfair playing field by establishing a diverse base of ancillaries in an attempt to participate in facility management fees through ownership of ambulatory surgery centers and, in some instances, specialty hospitals. These independent surgeons, however, must be mindful of a rigorous anticompetitive set of regulations pertaining to self-referral. They must not receive reimbursement proportionate to the volume of their referral when participating in entitlement programs or they risk violating these regulations.

Does legislated healthcare reform as we confront it today give an unfair advantage to the small percentage of healthcare systems that are highly integrated and enable them, through their medical practice divisions, to obtain a leg up on the vast majority of orthopaedists who are small business owners? I think so.

Employment trends
The Academy’s member survey results must be viewed with an awareness of selection bias. Unlike the group of BOC/BOS leaders, 55 percent of those responding to the survey were employed by a hospital or a hospital/medical foundation. The demographic of the respondent group was also older and more experienced and obviously closer to retirement. What of the trends seen with younger members of the Academy or new graduates who will soon be seeking employment?

Although employed physicians are generally happy with their contracts, these contracts may give them a false sense of security. It would seem that neither the AAOS nor the state orthopaedic societies do a good job in helping physicians to understand how they might deal with contract negotiations. This presents an opportunity for both state orthopaedic societies and the AAOS. We should help both employed and independent physicians gain a better understanding of contractual relationships and how to negotiate. We also need to understand what degree of satisfaction exists among independent orthopaedic physicians with the contracts they have with one another in nonemployed practice environments.

A question of advocacy
Lastly, this survey begs the question as to why the American Association of Orthopaedic Surgeons’ Political Action Committee is not our primary source of legislative advocacy. It appears that state orthopaedic societies are associated with perceptions of addressing legislative advocacy and political activism.

I think it is also curious that AAOS members do not feel that the activities of state orthopaedic societies are as significant as do the leaders of those societies. I found it very curious that only 5 percent of those responding were interested in the value of quantitative device-related outcomes.

Our state orthopaedic societies are in third place, not in first or second place, when it comes to the significance of membership. With the strength of the AAOS and large subspecialty organizations, I frankly do not see this as a surprise nor do I see it changing in the future.

Gregory S. McDowell, MD, is a Board of Councilors representative from Montana and chair of the AAOS State Societies Committee.