A growing number of orthopedic groups are aligning with management services organizations as economic, payer and administrative hurdles continue to challenge physician-owned groups to maintain autonomy.
"For us, it's about creating your own world, and size is going to matter," Steve Holtzclaw, MD, CEO of U.S. Orthopaedic Partners, said during a panel at the 21st Annual Spine, Orthopedic & Pain Management-Driven ASC + The Future of Spine Conference in Chicago. "We see how big the hospital systems and payers are getting. Now individual orthopedic practices aren't big enough to compete with these entities."
"I see orthopedics as being about 20 years behind ER and anesthesia. The margins were so slim back then that they all had to come together if they were going to survive," said Dr. Holtzclaw, who began his career in emergency medicine before becoming president of hospital-based services for TeamHealth and CEO of Alteon Health, a physician-led acute care medical group.
Orthopedics has been able to stay independent for the most part because its profit margins have been solid, but now it is getting squeezed like other specialties have in the past, according to Dr. Holtzclaw.
"It's really a question of which model is going to work for what you're doing," he said. "I see two worlds being created here. The ones that are still tightly connected to the hospital and the ones trying to be separate from the hospital."
Commercial payers are revamping policies to push providers and patients out of the hospital and into ASCs, where procedures can be performed at a lower cost, and, arguably, at a higher quality. Patients also prefer ASCs over hospital outpatient departments for reasons including reduced cost, improved patient experience, faster access and shorter stays, according to a survey conducted by The Leapfrog Group.
The only stakeholders pushing back against this movement are hospitals, because they are losing a significant amount of income, according to Dr. Holtzclaw.
"But in defense of hospitals, they've got operating rooms and may have to do bypass surgery and then deliver a baby and then do a cataract surgery. It's not easy to juggle all these different specialties," he said. "I think MSOs are still to be defined in the orthopedic world, but I do think we'll see two different worlds: the ones separate from the hospital and the ones linked with the hospital."
USOP is affiliated with 11 practices comprising about 300 orthopedic providers across Louisiana, Alabama and Mississippi, according to its website.