Becker's Spine Review, "How to remain independent in a bundled payment & consolidation-focused market – CAO leadership explains insights"
By Mackenzie Garrity
Over the past decade, spine and orthopedic practices have seen an influx in consolidation. However, this trend has plateaued recently.
The reason for less consolidation? Private practice physicians are teaming up to form groups. Bethesda, Md.-based The Center for Advanced Orthopaedics is among the largest orthopedic groups in the nation that allows its physicians to remain independent while giving them resources to succeed.
In a recent Becker's Spine Review interview, CAO President Nicholas Grosso, MD, and Vice President Louis Levitt, MD, explained how they are responding to value-based care, bundled payments and consolidation.
Question: What are the biggest trends you are seeing within orthopedic and spine practices when it comes to consolidation and remaining independent?
Dr. Louis Levitt: While I'm not sure if its relative to each specific specialty, I do see surgeons looking to negotiate with payers and cut expenses by offering shared services between specialists. So, in orthopedics, when we get at the operational level, we can negotiate better fees for a single practice. We can also cut costs through shared services, so surgeons can practice efficiently and be satisfied with their income.
At the next level, when you take a very large group of specialists and you break them into super specialties, such as spine and sports medicine, there is also the opportunity for the collaborative venture for physicians who may not necessarily have the chance to interact with one another on a daily basis. There is a great opportunity to be able to share the clinical space to improve better quality patient care and a better-quality patient experience.
At the national level, every one of the subspecialists wants to walk into a meeting and wear a brand that establishes their authority. Being associated with recognized brands, such as CAO, gives these surgeons credibility.
I think the trend continues. We are a lot more attractive today. When we first started, we were not this brick and mortar company that had a central organization source. Many of the physicians, therefore, came in with trepidation and with one foot out the door. Since then, we have grown to a solid company that can show and not just tell you about the benefits of joining a supergroup. And when you compare the gains you can make to what it takes to administrate a private practice alone, many physicians agree that the decision to be part of a group has paid off.
Dr. Nicholas Grosso: Five years ago, when we first started to think about putting CAO together, the situation was a little different than it is today. Hospitals were on buying sprees trying to buy up specialty practices, and there was a large group of us that wanted to stay independent private practitioners. At that point, the main goal was to remain independent while controlling costs and having weight with the payers. As the market has progressed, people are seeing the benefits of staying together are more numerous than originally thought.
After our work streamlining evidenced-based processes, we are now creating a research foundation with the hope of getting research grants for work that has not been done at the university level. What we have done is create something that we are finding the power of as we grow.
We have continued to grow in our geographical footprint. There is consolidation across the country that is happening. As time goes on, you may see some of the bigger groups consolidating amongst themselves because the medicine of being bigger allows you to able to do more as a large entity.
Q: How is value-based care affecting your practice or your plans for the future? Has it made it difficult to maintain independence or posed opportunities for independent centers who can perform the procedures at a reduced cost?
LL: We were a little smarter at the beginning with setting the expectation for our physicians from the onset of the consolidation. Physicians know there is going to be alternate payment methods, and that pay for performance systems and better outcomes will get higher reimbursements. We have structured our company to participate at the smaller level in bundled payments. Now we are heading the company to ultimately do population management of musculoskeletal disease. We are getting away from trying to sell the physicians as just surgeons. Rather, we are trying to explain to the physicians that we can manage this disease state, and if we focus on the stages of management, we can really reduce costs while taking the information and negotiate partnerships with commercial payers and hospitals.
Because we are as large as we are, Medicare is laying down performance marks in order to make full payments. We are able to manage merit-based payments more effectively by hiring expertise.
NG: We structured ourselves at the beginning for alternate payment methods. For the past two years, we have been ready to accept risk on a bundled payment or alternate payment model. It surprised me, however, that the payers aren't ready. Big payers in the market continue to suggest pay for performance models. We think and have data from other groups that if payers offer bundled payment options they can really move the needle. The government is really driving it with [Bundled Payments for Care Improvement] Advanced. We see the benefit for everyone involved in the alternative payment methods because the patient will have better outcomes at a lower cost, the payers will save money and our physicians will all do better. It's a win-win-win situation.
The regulatory environment is getting ever more complicated. For the average group per physicians, it would cost $30,000 to $40,000 a year to fully comply and implement MACRA and MIPS. Because of our size, it gave us a great edge to put together a program that understands the regulatory compliance.
Q: What tools and partnerships do independent physicians and groups need in order to make successful contracts and build bundled payment options?
LL: The baseline is you need to have data. However you get your data and the different programs you participate in, you not only need to generate the data, but to also validate the data for the people who are funding the efforts. Consolidating financial and clinical data has been a huge wall for us the overcome. Those who can control data and have robust data that is verifiable will win in the end.
Payers often believe that if you practice medicine cheaply you are a better physician. And if you are an expensive physician you are not as good. There is no correlation between the patient experience and cost of care.
NG: Data is the key going forward. it has been a little bit of a sticky point for us because we have been moving toward numerical data from our clinical electronic medical records as well as from the financial side by implementing certain programs. Data analysts, therefore, play a crucial role. The only data payers have is the expense, so you need to be able to provide the clinical outcomes data. Costs can be a very poor indicator or quality, but that's all the payers have to go off of.