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AAOS Now

Published 4/1/2014
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Deborah Meyer

New Models of Healthcare Delivery in a Private Practice Model

Maintaining and improving current revenue levels is one of the most important issues facing orthopaedic surgeons. During the Practice Management Symposium for Practicing Orthopaedic Surgeons held in New Orleans last month, Craig R. Mahoney, MD, of Iowa Ortho, presented several concepts for privately owned practices to consider when working within the new healthcare payment models.

According to Dr. Mahoney, revenue acquisition is rapidly changing and healthcare delivery models such as service line comanagement, hospital administration, participation in an accountable care organization (ACO), and bundled payments present both benefits and risks.

In service line comanagement, Dr. Mahoney stated “surgeons could be viewed as consultants that were paid, but not necessarily employed, by the hospital.” He stressed the importance of ensuring that the relationship between the surgeon and the hospital is clearly defined in a mutually beneficial agreement.

Working in hospital administration, for surgeons who are direct hospital employees, has both advantages and disadvantages with regard to revenue, noted Dr. Mahoney. Potential revenue advantages include compensation without financial risk, but risks may include the potential for a pay reduction.

Dr. Mahoney stated that ACOs were established under the Affordable Care Act to tie reimbursement to an overall reduction in cost of care for a predefined group of patients. Participation in an ACO offers surgeons opportunities to decrease overall spending and improve the quality of patient care; however, surgeons will have to deal with increased reporting and bureaucracy and will need to give up control of many aspects of their practice.

Dr. Mahoney stressed that, to remain successful in private practice, surgeons must understand the benefits of the new payment models of healthcare delivery, improve outcomes, and increase efficiencies in their practice.

Hospital employment
The hospital perspective was presented by Michael Q. Freehill, MD, a health system employed surgeon with Allina Health Systems. Dr. Freehill stated that selecting the best practice setting is the key to both future revenues and professional happiness. Some key items to consider in making the decision between employment and private practice include the following:

  • overhead and expenses
  • revenue potential and billing
  • coding management

According to Dr. Freehill, hospital employment has good, bad, and ugly sides. Favorable economics, good referral sources, and lifestyle improvements, for example, may be benefits of hospital employment. However, “administrative challenges can be layered beyond belief,” noted Dr. Freehill.

Additionally, the hospital-employed surgeon does not have input regarding personnel issues such as hiring a good, or removing a bad, staff member. The “ugly” issues that Dr. Freehill believes hospital-employed surgeons face included favoritism, the inability to review and monitor billing, a lack of or delayed response to surgeon’s concerns, and the need to live in the corporate culture.

To be successful in hospital employment, orthopaedic surgeons must be clear on what they want and fully prepared to ask for what they want during negotiations. He also advised paying close attention to such items as incentive plans, call requirements, and contingencies. “Only you have your best interests in mind,” he said.

Deborah Meyer is the program coordinator in the AAOS practice management group.