The San Francisco Chronicle, "Orthopedists opt for independent group"
Orthopedists opt for independent group
By: Allisa Gulin (The Daily Record)
Denny Tritinger has some advice for anyone who wants to know what going to the doctor will be like in the future: "If anyone tells you they know where health care is going in the next five years," he says, "don't listen to them."
But in the next breath, the executive director of The Centers for Advanced Orthopaedics, a provider group created last year, proclaims its model "the future of medicine."
Tritinger does not pretend to know what changes may be lurking down the road for the health care industry; he's just confident that the nearly 130 physicians who have joined the group are on to something.
The Centers for Advanced Orthopaedics is a network of doctors hailing from 25 practices in Maryland and surrounding states who have joined forces to promote the private-practice model and push back against mounting pressure on doctors to join larger hospital or health care systems.
"With all the changes in medicine right now, our physicians either had the choice of being in a small practice that would become more and more ignored and less relevant, or of being in a large institution and losing their autonomy," said Tritinger, an accountant who has consulted for multiple types of provider networks.
"Or they could find a way, as they have in this model, to stay focused on their patients and maintain their independence while becoming more efficient and cutting costs."
CAO aims to consolidate back-end functions such as marketing and IT while using its greater bargaining power to secure higher reimbursement rates. Economies of scale also work in its favor when negotiating contracts with suppliers, executives said.
Even though some of the expenses are shared, the profits aren't, Tritinger said. The individual practices, now called "divisions," retain their autonomy, and the physicians will receive pretty much the same salary, he said.
Together, the 25 practices operate 45 offices — 35 of them in Maryland — and employ about 1,200 staff members, who became employees of CAO when the group officially launched in January of 2013. Most of the physicians became owners of the group.
Nationwide, the number of doctors on hospital payrolls has risen by one-third since 2000, according to the American Hospital Association.
The trend is visible in all specialties, but it's especially pronounced in orthopedics. These practices bring in a lot of revenue, so they're attractive acquisition targets for health systems, Grosso said, adding that the demand is only expected to increase as baby boomers — and their joints — age.
At the start of 2014, Greater Baltimore Medical Center added to its payroll Orthopaedic Specialists of Maryland P.A., a practice that had rented space in one of the hospital's physician pavilions for more than 20 years.
In an environment where private practices are becoming fewer and far between, Tritinger said the time was ripe for a group like CAO to mimic the benefits of a large, resource-rich health system while allowing participating doctors to maintain their autonomy.
Serving "hundreds of thousands of patients," CAO is largest group of its kind in the region and one of the largest in the country, said its president, Dr. Nicholas Grosso.
The model has not been used in Maryland before, Grosso said, although it has been implemented successfully in a handful of other states. There have been many attempts over the years, he said, but they've fallen apart.
"Egos got in the way," Grosso said. "I think guys always felt like they could do better on their own. I don't think people feel that way anymore. Doctors are fiercely independent, but this way, you give up the least amount of independence."
There are advantages for physician groups that join larger health systems, but CAO executives say they think private physicians can provide a better experience for patients than salaried hospital-employed doctors.
"It would certainly be easier for me if I came in from 9 to 5, saw X number of patients a day as per my contract, and then I go home," Grosso said. "I wouldn't have to worry about the business end of it, dealing with the payroll, negotiating with the payers. But on the other hand, I don't have the autonomy . to bring in one of my long-time patients if they really needed it late one night. . It introduces somebody else in between you and the patient, which we don't like."
But in most cases, becoming employed by the hospital is purely about survival, Grosso said. The costs of running a doctor's office continue to rise, Grosso said, but revenue doesn't always keep up, as insurers slash reimbursements for certain procedures.
"I'm not saying that (going under) was imminent in the next few years, but I think we all saw the writing on the wall," Grosso said. "Survival was the motivation for us to do this."
Another part of the temptation to join with the big guys is "feeling powerless," Grosso said. Even though Grosso's practice, Orthopaedic Associates of Central Maryland, with its three locations and 14 physicians, is one of the largest in CAO, the practice still felt like "a really small fish" when it had negotiated with insurance companies or suppliers on its own, he said.
But CAO provides the same strength-in-numbers benefits, executives said.
"We think our model is the best of both worlds," Tritinger said. "We can always form an alliance with hospital systems . but our way ensures the patient gets the best possible care at the lowest cost."
Each practice had been receiving different reimbursement rates from insurers; there's great variation from provider to provider, even for the same services. So, there's no one figure representing how much more each practice will get paid once the group starts billing under newly negotiated group rates, but Grosso estimates the increases could range from 10 percent to 14 percent.
It's also hard to predict combined revenue, Grosso said, because the new supply contracts have not gone into effect yet. But, he said, the group has reduced some practices' supply contracts by about 15 to 20 percent, such as for injectable medicines, which orthopedists use frequently.
Additionally, putting all the physicians under one medical malpractice contract "saved a lot of money," Grosso said.