Employment of Orthopaedic Surgeons:

Understanding the trend

Health Care Systems CommitteeAlexandra (Alexe) Page, M.D.

Disclosures

Vice-Chair of the AAOS Health Care System Committee

Partner in Southern California Permanente Medical Group

I have no other conflicts of interest to disclose

Health Care Systems Committee

Is Employment the future of

Orthopaedics?

Health Care Systems Committee

MEDICINE?

“THE DECLINE OF SOLO AND SMALL MEDICAL PRACTICES”

UNITED STATES HOUSE OF REPRESENTATIVESCOMMITTEE ON SMALL BUSINESS

SUBCOMMITTEE ON INVESTIGATIONS, OVERSIGHT AND REGULATIONS

Testimony of:Mark Smith, President Merritt Hawkins

July 19, 2012

Employment in Ortho: Understanding the Trend

• Review the models of “employment”• Explore factors that are driving the trend• Present data from a 2010 AAOS Health

Care Systems Committee survey on surgeon practice patterns

• Suggest responses to the employment trend

ARS: “EMPLOYMENT” in the BOC/BOS

DO YOU CONSIDER YOURSELF EMPLOYED?

YESNO

Health Care Systems Committee

“Employment”: More options than a paycheck

• Staff Model / Foundation model • Hospitalist• Academic Center

Health Care Systems Committee

Staff Model

• Classic employment• Salary, salary + incentive• Staff Model:–e.g. Geisinger, Mayo, some

academic programs

Health Care Systems Committee

Foundation Model

• “Ban on the corporate practice of medicine” (CA, TX)• Medical group has exclusive

contract with a hospital• e.g. Cedars-Sinai, Sutter, Scripps,

Rady Children’s, Kaiser Health Care Systems Committee

Hospitalist

• Follows the internal medicine hospitalist model• Delphi established an early model–locum tenems –Filled void for hospitals which

could not provide ER coverage

Health Care Systems Committee

ARS: “EMPLOYMENT” in the BOC/BOS

Do you receive a paycheck for ANY component of your

professional services?YESNO

Health Care Systems Committee

“Employment”: More options than a paycheck

• Service line co-management, • Joint ventures• Medical directorship• Physician Enterprise Model• Affiliated Professional Entity

Health Care Systems Committee

Factors Driving Physicians

to

Employment Models

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HOSPITALS

1990’s•Physician acquisition defensive strategy against reimbursement change

•No physician involvement

•Compensation on past performance

•New physicians interested in private practice

Now•Acquisition as tool for care coordination, preparation for reimbursement change

•Physicians in hospital leadership•Compensation incentive-based

•Emerging physicians more interested in employment models

How has employment evolved?

UNITED STATES HOUSE OF REPRESENTATIVESSUBCOMMITTEE Testimony

Mark Smith, President Merritt HawkinsJuly 19, 2012

•Flat or declining reimbursement •Growing regulatory and administrative paperwork •Malpractice insurance costs •The implementation of information technology •The effects of health reform

Factors Driving Physicians to Employment Models

• Healthcare reform:–Move to integrated care systems

(e.g. ACOs, PCMH) –Value-based reimbursement–Reporting requirements (PQRS)

Health Care Systems Committee

Factors Driving NEWPhysicians to Employment Models

• Increasing burden of educational debt• Cultural change among

graduating physicians

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Hospital Factors Driving Employment Models

• Challenges with ER coverage• Potential for improvements in

quality/cost control in era of value-based purchasing• Hospital desire to control service lines• Market domination

Health Care Systems Committee

Hospital Factors Driving Employment Models

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ARS: In your community, how do employment contracts compare to net income in

private practice?

1. Above anticipated private practice income2. About equal3. Below anticipate private practice income4. Don’t know.

Health Care Systems Committee

Hospital Factors Driving Employment Models

Services provided in hospital-based entity

Free-standing physician practice

Physician Facility rate

Outpatient PPS rate

TOTAL HOSPITAL-BASED RATE

Program Payment

$55.18 $39.42 $60.10 $99.52

Beneficiary Cost Sharing

+13.79 +9.85 +15.03 +24.88

TOTAL PAYMENT

$68.97 $48.27 $75.13 $124.40

AAOS Health Care Systems Committee (HCSC)

2010 Study of Hospital-Physician

Alignment

Health Care Systems Committee

AAOS HCSC2010 Primer:

Hospital Employment

Health Care Systems Committee

2010 HCSC Study on Hospital-Physician Alignment

• Electronic survey to 3500 random AAOS Fellows January 2010• 119 emails returned, total 3381

“true” surveys distributed• 772 responded• Response rate 23%

Health Care Systems Committee

2010 HCSC Study on Hospital-Physician Alignment

• Employment trend recognized when collected in 2010• Provides powerful comparison to

data generated by 2012 study commissioned by the BOC SOS committee, presented next

Health Care Systems Committee

2010 HCSC Study

• Mean age of population invited: 51.25• Mean age of respondents: 52.10• Gender:

Response by practice type2010 HCSC Survey

Shift in Practice Type through Career2010 HCSC Survey

Health Care Systes Committee

2010 HCSC Survey Results

Trend of increase in employed positions from career start to time of survey–Vast majority (79%) still considering

private practice for future–72% had practiced in private setting

at some point

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Which setting are you considering for the future?

ARS: Are you considering an employment setting?

Health Care Systems Committee

1.STRONGLY NO2.NO3.UNDECIDED4.YES5.STRONGLY YES

Reasons for considering hospital employment2010 HCSC Survey

“I became a hospital employee by. .“ (n=142)

Problems encountered with Shift to Employment Model

Factors leading AAOS fellows to leave a hospital employment setting:

• Loss of control over staff, finances, contract negotiations, etc. (37%)

• Change in terms after initial contract term (33%)

• Lower compensation (28%)• Loss of autonomy (28%)

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What Does this Mean?

• 2010 data indicate transition from private practice to employment was increasing• Numbers were still low

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What Does this Mean?

Current trends:Transition to employed setting

andEmployment directly from training

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Is this the future of Orthopaedics?

• Possible shift to the dominant model as health care reform rolls out• I anticipate & hope there will

always remain a role for private practice

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Concerns with Rising Employment

August, 2011:Rising Hospital Employment of Physicians: Better quality, higher costs?

Health Care Systems Committee

Is this the future of Orthopaedics?

Hospitals may find acquiring physician practices & ASC’s less appealing:–MedPac recommendations to

decrease E&M reimbursement–OIG 2013 plan to review payment

disparity between ASC and HOPD rates

Health Care Systems Committee

MedPac Recommendation The Congress should direct the Secretary of

Health and Human Services to reduce payment rates for evaluation and management office visits provided in hospital outpatient departments so that total payment rates for these visits are the same whether the service is provided in an outpatient department or a physician office.

COMMISSIONER VOTES: YES 14 • NO 2 • NOT VOTING 1 • ABSENT 0

Office Inspector General 2013 Plan

Hospitals—Acquisitions of Ambulatory Surgical Centers: Impact on Medicare Spending

“We will determine the extent to which hospitals acquire ASCs and convert them to hospital outpatient departments . . . also determine the effect of such acquisitions on Medicare payments and beneficiary cost sharing.“

How do we respond to the trend?

Changing definition of what it means to be an orthopaedic surgeon, or even a physician

Health Care Systems Committee

Employment Challenges: Culture

•Issue for all hospital-physician alignment models•Changes in culture for both physicians and hospital•Generational culture changes

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Where do we go?AAOS, STATE SOCIETIES

• Understand and embrace the employed surgeon sector as part of the AAOS• Address the particular practice

needs and leadership training for the employed surgeon

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Where do we go?AAOS, STATE SOCIETIES

Recognize lifestyle expectations of the next generation may require changing the structure of small practices to attract new partners

Health Care Systems Committee

Where do we go? STATE SOCIETIES

Recognize & communicate:

Legislation on patient issues affects all practice patterns,

directly or indirectly

Health Care Systems Committee

Where do we go?

Education of residents:Different practice options

Understanding pros/consPersonal factors which can influence compatibility with practice types

Relevance of advocacy to all practice types

Health Care Systems Committee

Is Employment the future of Orthopaedics?

• Employment will likely increase but not eliminate private practice• Health reform will change all

practices. Just don’t miss the boat. . .

Health Care Systems Committee

Health Care Systems Committee