5 Things Orthopedics and Spine Practices Can Do Immediately to Improve Profits

Here are five changes and improvements orthopedic and spine practices can make immediately to improve profits in their practices.

1. Involve physicians in creating business policies. Solid business fundamentals are more important than ever in running a successful practice. It has also become more important for physicians to understand how the business component of their practice is operating in order to make necessary adjustments to counteract rising overhead costs and payment cuts. Involving physicians in the process can also help to ensure new policies are integrated into your practice's culture more quickly.

William R. Pupkis, CEO of Capital Region Orthopaedics in Albany, N.Y., says keeping physicians involved in making policy can ensure your practice can easily identify problems affecting profits and make changes to improve them. "We meet with the board as a whole and identify and present statistics on problems, such as billing errors," Mr. Pupkis says. "I make one or two suggestions, but the physicians ultimately make decisions on what path we should take."

2. Consider adding ancillary services. Many orthopedic and spine practices benefit from adding ancillary services, including imaging services and durable medical equipment, and joining or opening ASCs. Leveraging the services of partners within a multispecialty group can also benefit the practice in this area.

Ken Austin, MD, an orthopedic surgeon with Rockland Orthopaedics & Sports Medicine in Airmont, N.Y., says providing services such as physical therapy and pain management in addition to orthopedic care can have its benefits. "It is a move classic to orthopedic practices to reach out and become multispecialty. We have benefitted by opening small, efficient satellite offices so that gives us more outreach in the community and we can convert that into more patients in our offices," he says.

Mr. Pupkis says DME is one service most practices should consider as it is relatively simple to add for even smaller groups. "Practices will need one key individual to handle inventory. The billing can be done within the practice's current methods. If set up properly, practices can see good margins," he says.

Practices can use Medicare to determine at what prices to sell DME. He also notes that practices should limit the number of larger, more expensive items they keep on hand. Physicians working at practices providing DME must also limit the amount of equipment they give away.

Another common ancillary service is MRI, but Mr. Pupkis notes that this can cost well over $1 million to set up and may not make sense for smaller practices. "You will need to invest in the MRI, hire someone to build the suite and then ensure you have the proper accreditation," he says.

3. Improve outreach in your community. Establishing a strong presence and name recognition can result in more patient referrals for your practice. This does not mean that your practice needs to invest a lot of money on marketing or advertising. Mr. Pupkis recommends, at the very least, for practices to have a Web presence. "Search your local competitors and make sure that you have a site that at least matches theirs in quality and information," he says.

Teaming with local athletes can also be beneficial to orthopedic and spine practices. Dr. Austin says, "We are in a small, tight-knit community, so we make sure we serve them in many ways. We take care of high school athletes, and we help to set-up and provide medical support to our local little league. This gets our name out in the community, and if any of the players need care, they usually come to us."

Maintaining relationships with referring physicians is also a critical part of a practice's outreach. Dr. Austin says a major challenge can be contacting new physicians. "In the past, we could spend some time talking with referring physicians in the hospitals, but recent trends show that hospitals are using more and more hospitalists and more referrers are staying in their offices. Now, we spend a lot more time on the telephone with our referring physicians," he says.

Dr. Austin also says orthopedists should be sure they are not roadblocks when it comes to referring physicians providing care to their patients; rather, they should make it easier for physicians to send their patients to the orthopedic practice if necessary.

4. Drop your worst payor if necessary. Increasing legal struggles regarding out-of-network contracts have provided more impetuous for practices and their ancillaries to stay in-network. However, practices should not be afraid to drop payors that are no longer profitable for them.

Mr. Pupkis says practices should consider their managed care contracts as an "investment portfolio." He says, "Both provide economic returns, and the more diverse they are, the better. Both demand careful management."

Payors can be tracked as a percentage of a practice's total payments. Medicare should be the lowest payor in this model; commercial payors should represent a higher percent. Practices should then decide if payors who are closer to Medicare's numbers are profitable for their businesses.

Mr. Pupkis warns that dropping out of a payor's network can be a long, painful process for the practice, its physicians and patients, and the decision should be considered carefully. However, the practice needs to be dedicated the decision. "[The process] does not work unless you are willing to 'fire' a payor, because you will have no leverage in the process if you back down," he says.

The process of dropping a payor requires a few major steps. Mr. Pupkis' practice began its process by first sending out letters to patients and posting notices in their office saying they would no longer be in-network for the payor. This began well in advance of the contract termination date. In the notices, payor contact information was provided so patients could respond to the company directly and voice their concerns. In a few instances, this action resulted in the payor returning to the table willing to negotiate, resulting in a contract that worked for both the practice and the payor.

Not every attempt ends this way, however. Mr. Pupkis says the main fact to know before moving out-of-network is that practices must follow-up and attempt to collect payments from patients in order to avoid legal troubles. "In the past, many practices would only submit claims to the payors for their 80 percent of the payment, and then 'forgive' the patient's contribution. Now, practices are legally required to make rigorous attempts to follow through on outstanding patient payments," he says.

5. Leverage EMR to the best of your ability. An increasing number of orthopedic practices are investing in electronic medical records, and if used to its maximum potential, this costly investment can improve overall efficiency.

Dr. Austin says his practice has coordinated its EMR with its scheduling and billing components. By capturing patient data at the beginning of the process, the practice has been able to increase efficiencies by reducing the number of staffing hours spent entering information into a separate system. "Instead of spending extra time filling out forms, we are about to get in to the office and manage care better by making efficient use of the staff's, physician's and patient's time," he says.

Contact Renée Tomcanin at renee@beckersasc.com.