David Bailie, MD, runs a practice built on his own reputation with no ancillary revenue streams, and limited insurance contracts. He's been doing this for a decade and is thriving.
He's president of Scottsdale-based Arizona Institute for Sports Knees and Shoulders, and he previously worked as a sports medicine surgeon with a large mega group that was later bought by a hospital system.
"Like any big group you have some people who aren't pulling their weight, and the bigger you get, the more you have that," Dr. Bailie said. "We went through some turmoil about a decade ago, and I basically was either going to stick it out or try something different … I'm just not a big fan of corporate medicine. I think it's dangerous for patients, because everything is based solely on revenue and RVUs and not quality."
That's when he decided to step out and begin his own practice, and on top of that he eventually shed ties with large insurer contracts. He initially worked with a few major insurers but weeded them out in the first year.
Dr. Bailie runs a tight ship to keep costs down and maintain quality care. Measures include mostly working remote and using cloud-based services to avoid paying IT services. Everything is paperless, and services such as casting and bracing are outsourced.
"There's economies of scale in a big group, but overhead still runs 40% to 50%, and they have to pad their income with ancillary revenue streams," he said. "You start self-referring a lot, and even if you mean well, you keep everything in house, then you overutilize services."
Dr. Bailie's practice is a small office that he works in twice a week, he said. He's in surgery two days a week, and some weeks he doesn't have any surgeries.
"I used to do 10 to 15 cases a week, and I can do one or two a week and make just the same amount of money," he said.
Despite the benefits, Dr. Bailie said he would only recommend making a similar leap to specialized surgeons who have established themselves in their community and built a loyal patient base.
"I don't think a new person could do it because we have to build a reputation in a certain area," he said. "I don't think the general orthopedic surgeon or somebody who does a little bit of everything can get away with it because they don't separate themselves from the pack. You have to have a reputation in your community where you have been or are the go-to [physician] for certain problems or at least on the list of one of the go-to people. If you don't have that, it's going to be hard-pressed to do it."
There also isn't any room for greed.
"Be fair and transparent — don't price gouge," he said. "If you've been in practice long enough, you know what you're getting paid from insurance, and you know what you think is fair. So for rotator tear costs, I have a small, medium, large and massive fee schedule. If I get into a medium-sized tear and I already charged the patient, and it's way worse, I don't change the [price]. That's my risk for not being able to figure that out ahead of time. I'm fair and transparent with everything. I turn a lot of people away from surgery who are willing to pay because I don't think they need it … Over time, that reputation gets even stronger."