Prioritize the opportunity for ownership of an ASC
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The U.S. health care system is in turmoil. Increasing costs, loss of margins, inflation, supply and staff shortages and burnout are among the challenges.
For many physicians, the complexity and uncertainly encourage employment in large systems to buffer the variable risk. According to Physicians Advocacy Institute, more than half of all physicians are employed by a health care system or hospital and many others are employed by corporate entities. Most of today’s graduating residents will be employed physicians for their entire career. Physicians have expressed their perception that their identities as employed doctors within larger groups or health care systems has been reduced to the level of a “widget,” a simple component that can be easily replaced or interchanged.
Continued growth
Many systems emphasize the health care entity or corporate enterprise as the center of patient care, as if the building provides the care. This often restricts or strongly discourages employed physicians from promoting their unique expertise. Presumably, there could be a fear that physicians may become more than “widgets,” with special skills that cannot be easily replaced despite value to the health care system and patients. Most concerning may be when a group of physicians creates market-separating programs that may provide significant negotiation leverage and conflict with the leadership. However, the organization often benefits greatly from the unique programs and enterprise.
For orthopedic surgeons and practices to be successful, they need to grow and evolve personally and professionally in any environment. Unfortunately, many orthopedic surgeons are trapped in a practice or system that limits resources, support staff and relief from increasing clerical requirements. Analysis of contributions to the practice can be disconnected by administrators, and objective measures may be dismissed as biased and misleading. Additionally, the impact of ancillary revenue directly generated by the orthopedic surgeon’s practice may be removed. When the value of the orthopedic surgeon is reduced to their evaluation and management (E&M) work, or E&M codes, without consideration of ancillary services and procedures, the enterprise the surgeon works for will begin to see them as a cost center.
Value of ancillary services
Given these challenges, valuable ancillaries include radiology, rehabilitation services, durable medical equipment and therapeutic injections. One ancillary service critical to the long-term sustainability and success of an orthopedic practice is ASC ownership and management. ASCs are valuable assets when surgeons establish an efficient, low-overhead, high-volume, patient-focused practice to bring a return on investment (ROI) that incentivizes the best care at the lowest cost and provides margins that support sustainability and growth.
The landscape of ASC ownership is changing. Nonphysician investors, such as hospitals and private equity groups, are pursuing ownership or partnership with ASC physician owners and recognize this valuable business model.
The value of an ASC is in direct proportion to the number and types of cases performed, which can only be done by surgeons, not administrators or advanced practice providers. When a facility cannot incentivize or contractually restrict surgeons to use its facility, ASCs will lose cases, have reduced revenue and run the risk of a failed venture.
With many ASCs being surgeon owned and led, typical arrangements provide an environment that consistently outperforms hospital outpatient centers and multispecialty ASCs in patient and surgeon satisfaction and revenue with attractive growth margins. Even progressive academic groups have opportunities for orthopedic surgeons' involvement in creative partnerships with potential for long-term success.
Better transparency
Orthopedic surgeons who are employed or in private practice should prioritize the opportunity for ownership, leadership and surgical care in an ASC as it is the most important ancillary service. For employed surgeons, a physician leadership or management role in an ASC, even without equity, can provide better transparency to the true contribution of revenue and profit.
Hospital-owned with physician co-management models can benefit all stakeholders. Also, this model provides the opportunity to improve workflow and resources to maximize the enterprise’s ROI, like physician leaders who own their ASC. Achieving patient care goals and impactful profit levels for the enterprise are valuable when negotiating physician compensation and future investment in the practice and orthopedic group.
- References:
- Badlani N. J Spine Surg. 2019;doi:10.21037/jss.2019.04.20.
- Hui CH, et al. Arthroscopy. 2023;doi:10.1016/j.arthro.2022.08.040.
- Merritt Hawkins 2019 Survey of Physician Inpatient/Outpatient Revenue. Available at: www.merritthawkins.com/uploadedFiles/mhawhitepapereconimpact2021.pdf
- Physicians Advocacy Institute. COVID-19’s impact on acquisitions of physician practices and physician employment 2019-2020. Available at: www.physiciansadvocacyinstitute.org/Portals/0/assets/docs/Revised-6-8-21_PAI-Physician-Employment-Study-2021-FINAL.pdf?ver=K6dyoekRSC_c59U8QD1V-A%3d%3d
- For more information:
- Anthony A. Romeo, MD, is the Chief Medical Editor of Orthopedics Today. He can be reached at Orthopedics Today, 6900 Grove Road, Thorofare, NJ 08086; email: orthopedics@healio.com.
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