At the 19th Annual Ambulatory Surgery Centers Conference in Chicago on Oct. 26, 2012, a panel of experts discussed healthcare real estate and opportunities for properties in the future. The group also discussed the role of real estate in healthcare deal making.

Payer+Provider Syndicate President Adam C. Powell, Ph.D., discusses the ambulatory surgery center as a disruptive force among healthcare providers and how ASCs can leverage this power in their market.

This article is written by Derek Singleton of Software Advice.

There's been a lot of speculation about what will happen to the Affordable Care Act (ACA) — commonly referred to as ObamaCare — if Mitt Romney is elected in November. Although Mr. Romney has repeatedly promised to repeal the ACA on day one of his Presidency, the reality is that no President has the power overturn a law without Congressional support. Since he's unlikely to garner the necessary support, ACA is pretty much a done deal.

One of the most sweeping changes concerning the healthcare system today is accountable care organizations. Hospitals, specialists, primary care physicians and insurance companies are all worried about how they will fit into this new model of care, which values quality over quantity through a pay-for-performance instead of a fee-for-service. However, some orthopedic surgeons and hospitals have decided to push forward with accountable care organizations and are finding the challenges minimal — and even seeing benefits — to participation.

More than 86 percent of physicians said income in their practices has been flat or declining over the past three years, according to a recent survey from Merritt Hawkins.

Andrew Cordover, MD, a spine surgeon with Andrews Sports Medicine and Orthopaedic Center in Birmingham, Ala., and Anthony Rinella, MD, a spine surgeon with Illinois Spine & Scoliosis Center in Homer Glen and co-founder of SpineHope, discuss the biggest challenges for spine surgeons coming in the next decade.

---

1. Improving quality while lowering cost of care. In today's healthcare environment, emphasis is placed on providing high quality care for the lowest cost possible. Providers are incentivized to improve efficiencies and cut costs to lower the overall price for care as payors lower reimbursement rates and direct their members to providers with the highest quality reports.

"Spine surgeons have the challenges of improving quality, lowering cost and providing access to the older population," says Dr. Cordover. "There will be changing technology in the coming years and we have to implement it in our practice."

In some cases, payors have stopped covering previously approved procedures, citing a lack of data supporting its effectiveness. As a result, spine surgeons and researchers are engaging in high-level studies to show surgery's effectiveness among appropriately selected patients.

"It's important for me as a spine surgeon to stay involved with the continued development of outcomes measures that are appropriate for our specialty," says Dr. Cordover. "We also must have a voice in new technology because if it doesn't improve quality, limits will be placed on us due to cost cutting measures."

2. Fighting for coverage and better reimbursement rates. Spine has traditionally received high reimbursements and been considered an expensive procedure. As a result, payors are limiting their guidelines for coverage and providers must spend more time advocating for their patients.

"The approval process seems to be more arduous with each year of practice with regard to performing procedures," says Dr. Cordover. "My employees have to spend a disproportionate amount of time addressing coverage issues with insurance companies. Andrews Sports Medicine has had to hire additional employees to assist with these issues."

Insurance companies have successfully implemented these stricter guidelines to limit the number of expensive procedures they cover, and have a continued presence in Washington, D.C.

"Insurance companies often use the Milliman Care Guidelines to screen surgical requests," says Dr. Rinella. "While the effort to encourage evidence-based medicine is appropriate, the 'guidelines' are usually treated as hard rules. Insurers use gaps in the surgical literature to undermine the spinal community's standards of care, and justify their efforts with the Milliman Guidelines. Furthermore, insurance representatives hired for peer-to-peer reviews often lack the training to understand surgical subtleties, and this compounds inefficiencies in the process."

For the cases that are approved, reimbursement rates have dropped and in some cases declining reimbursements have forced private practices to sell to the hospital. "It's a challenge for us as well as everyone in the industry," says Dr. Cordover. "We need to practice more efficiently than ever. I am concerned that there are going to be some practitioners that will find it a challenge to survive over the next decade."

3. Providing access to care for the older population. As baby boomers age, spine surgeons are seeing an influx of patients with back pain. Caring for these patients has become even harder as the number of young surgeons hasn't kept up with the number of surgeons retiring, and Medicare continues to lower reimbursement rates.

"There is a challenge we'll need to define with the aging population because as technology advances, we are able to treat them, but they may not have access to care or the ability to pay for their care," says Dr. Cordover. "With more educated patients, the demands on the system are going to reach new heights. New technologies and the cost of research and development will add additional strains. We are going to have to make some tough decisions with regard to how many resources we want to put into healthcare as a country."

4. Figuring out where spine surgeons fit into new payment models. Spine surgeons and specialists around the country are concerned about how they will fit into new payment models, such as bundled payments or accountable care organizations. This will be a special challenge for private practice spine surgeons who provide care at multiple hospitals across several health systems.

"The spinal community continues to develop patient outcome measurement tools to objectively track our treatment strategies," says Dr. Rinella. "We are always looking to improve evidence-based analysis and recommendations in spinal surgery."

Andrew's Sports Medicine and Orthopaedic Center has partnered with a local hospital and in the process of exploring ACO options.

"Over the next few years, we'll be developing quality outcomes measures as part of an ACO," says Dr. Cordover. "In the spine realm, I think it will be more challenging than other specialties to produce the outcomes measures because it's certainly not as clear cut as measuring survival rates for cancer or heart disease. There are some new instruments out there now and we are always looking to develop and improve upon the tools that we have to develop evidence based medicine in spine surgery."

5. Keeping surgeons in the national discussion about the future of healthcare. Regardless of what happens in the 2012 presidential elections, the healthcare delivery system will undergo a major overhaul over the next several years and spine surgeons must remain part of the discussion.

"Most healthcare decisions still take place in the medical doctor's office, especially in an expanded preventative care model," says Dr. Rinella. "We have to keep doctors in the discussion. Doctors are by definition a heterogeneous group, and we do not have adequate representation. We need to remember that the pharmaceutical, hospital and insurance lobbies are well represented, but only the doctors are making the true healthcare decisions on a daily basis at the patient level."

Spine surgeons must speak to their legislators to promote access to care. Surgeons can also become active in the advocacy branch of their local and national medical societies.

6. Dealing with Medicaid expansions and retractions. In June, the Supreme Court upheld the Patient Protection and Affordable Care Act, but struck down its Medicaid expansion in favor of allowing each state to provide Medicaid individually. For some states, this will still mean including more people in Medicaid while others will lead to fewer enrollees. Either way, surgeons who provide care for Medicaid patients receive very little reimbursement.

"In Illinois, the problem is that Medicaid pays a third of Medicare rates, and often takes 180 days to send payment," says Dr. Rinella. "No industry can survive receiving 10 percent of billed charges six months after a service is provided. There is also a disproportionate payment model between professional and hospital services. The hospitals are reimbursed at a much higher rate than the physicians. If the physician and hospital rates were adjusted in parallel, it would lead to a more synchronistic system."  

Medicaid reimbursement is disproportionately low to other healthcare insurance networks, which receive additional pressure to keep rates high enough so physicians can keep their doors open.

"Raising Medicaid to Medicare reimbursement rates would make Medicaid expansion more viable," says Dr. Rinella. "When the government pays hospitals very well for Medicaid services and pays surgeons very poorly, the hospital endorsement of Medicaid expansion creates a financial disaster for physicians. If we balance the physician and hospital payment formulas at a reasonable level, and adjust each side of the equation equally over time, we could align our interests and balance the overall federal healthcare initiative."

7. Overcoming regulatory hurdles limiting practice growth. Private practice physicians today face several uncertainties about their survival, including regulatory confusion over how they will be able to partner with other providers or take advantage of ancillary services in the future.

"Spine surgeons do not know if we will be able to own an MRI scanner, or what types of relationships with ancillaries or instrumentation companies will be allowed in the future," says Dr. Rinella. "There needs to be a clarification of the rules, because concerns over retrospective governmental punishments severely limit our growth and efficiency programs. We are told in general economic models that competition drives down prices.  However, in healthcare, competition between physicians and hospitals is being discouraged — and often destroyed — in an effort to benefit hospitals and other special interests."

Many private practice groups have weathered the economic storm over the past few years by merging with other groups in the community or adding ancillary services, such as imaging, physical therapy or ambulatory surgery centers, to their practice. However, depending on the state, practices may be facing Stark law issues with some of their relationships, and the federal government has already capped physician ownership of specialty hospitals.

8. Surviving healthcare reform. Without knowing exactly how the November elections will turn out, it's difficult to predict where healthcare is headed in the future. However, the ability to run a successful practice and prosper as a surgeon will be very important going forward.

"Some legislators have discussed repealing ObamaCare, but I think most people would agree that many of the components are strong steps forward, and can only be instituted at the federal level," says Dr. Rinella. "I do not see many proponents of annual or lifetime benefit limits, replacing pre-existing condition clauses, or repealing extension of dependent child benefits."

However, PPACA failed to address tort reform for surgeons and some states have refused to create health insurance exchanges, which the legislation is predicated on. Surgeons are spending more money to implement electronic medical records — 81 percent of respondents to a Medscape survey said they currently use one or are in the process of implementing one — but 26 percent say productivity decreased as a result and 30 percent reported EHR had a negative impact on their practice.

"The PPACA, though flawed, was a tremendous political accomplishment, but there are several things that need to be amended or clarified," says Dr. Rinella. "We do not know how employer insurance mandates will affect physician offices, how preventative medicine dollars will be spent, or how the state insurance models will work."

More Articles on Spine Surgery:
7 Ways to Market Artificial Discs in Spine Practices
5 Big Changes in Coverage Policies Devastating Spine Surgery
7 Steps to Enhance Spine Practice Revenue

Houston Medical Center in Warner Robins, Ga., is planning a $42 million expansion project that will include more area for pain management, according to a report from The Telegraph.

Four legal issues carry the most concern around accountable care organizations: Stark Law, the federal Antikickback Statute, tax-exempt status and antitrust law. These laws are structured to prevent fraud and abuse of federal healthcare programs, but could potentially impede ACO development and participation in the Medicare Shared Savings Program. Federal agencies accordingly designed a series of self-implementing waivers for the application of these laws, but the exemptions can lead to broad interpretations.

Healthcare reform is pushing the industry into uncharted territory. Healthcare providers must make decisions without precedent, and consumers are savvier than ever. Change this monumental cannot be achieved in a vacuum or with an insular approach. As a result, healthcare is borrowing lessons and business models conceived and implemented within other industries: hotels, automakers, media, retailers, service providers and financial institutions. As disparate as these fields may be from healthcare, they share the oldest and most basic economic concept: supply and demand.

Here are seven spine surgeons discussing cash-pay options at their practices.