The Annual Meeting of the American Academy of Orthopaedic Surgeons (AAOS) is always a tale of two cities. For the 2014 meeting in New Orleans one might say it was the best of times and even better times.
The Surgeon City is made up of surgeons, research, scientific and procedure debates and the politics of reimbursements, regulations and practice models. The other, the Corporate City, is made up of engineers, sales people, tools, instruments and implant devices.
The Corporate City is dominated at its core by the Big Sisters of Orthopedics (Zimmer Holdings, Inc., Stryker Corporation, DePuySynthes, Biomet, Inc. and Smith & Nephew PLC). These in turn are surrounded by the hopefuls who want to be acquired or grow into one of the big sisters. It’s all very clean, very tidy and tightly regulated and monitored.
Business Is Back
One of the healthiest signs at AAOS could be found at the edges of the Corporate City where a growing number of the small newbies and ankle-biters with their barkers, deals and bazaar barter atmosphere were hawking their goods.
Business is back. “Two years ago we couldn’t even talk to the docs about new technologies because they were too stressed out over business. This year, they’re coming to the booth to ask about new technologies, ” one of the corporate sales reps told us.
Business was so good; we (this writer) even saw cash exchange hands in the Bazaar neighborhood of the Corporate City. While English was still the language of choice, more foreign languages than ever were overheard as we walked the hall. Some of the smaller booths began to resemble a Middle East Bazaar with Chinese and Indian peddlers and pitchmen touting their tools and instruments to surgeons from all over the world.
One obviously hastily assembled booth consisting of a card table, tablecloth and a sign was displaying surgical tools. A surgeon from Latin America was digging into his wallet for a few hundred dollar bills and slipped it to the young Chinese woman behind the table. She was trying to figure out what to do with the cash, going to the back of the booth to open her suitcase. She then handed it over to her young male colleague, who stuffed it into his front pocket. Yup, business was back.
“Capture the Bundle”
Gone was the preoccupation with healthcare reform, Department of Justice, FDA foot-dragging and anxiety over the decline of physician private practices. In its place was talk of registries, clinical guidelines for payers and physicians finding ways to “Capture the Bundle.”
Hospitals are bringing private practice surgeons inside as paid employees, while insurers are buying large healthcare systems. The new Medicare and private insurer payment models are quickly switching from paying for volume to “bundling” lump sums together to be shared between physicians, hospitals and other providers.
Richard Rothman, M.D. encouraged his colleagues to stop fighting the last war and focus on ways to seize opportunities opening up under health care reform. “Capture the bundle, ” he said, by getting more physicians under one healthcare roof, like his academic physician-owned and controlled Rothman Institute in Philadelphia. “Size matters, ” he said. “We’re healers, not business people, but we have to organize to utilize leverage with payers.”
Azar Rallies Troops
Incoming Academy President Fred Azar, M.D., was on the same page with Rothman by telling members that the Affordable Care Act (ACA) is now the law of the land and new and younger Academy members are showing the way on how to utilize new technologies to get better, faster and smarter.
Azar is a well-recognized authority in sports medicine and the team physician for the Grizzlies, the National Basketball Association franchise in Memphis. He was recognized as the NBA’s Team Physician of the Year after his 13th season with the Grizzlies.
Make no mistake; surgeons were still stressed out over insurance companies, hospitals, politicians, regulators and getting paid for their services. But Azar rallied the troops.
The Opportunity of Paradigm Shifts
He focused on the significant changes in the world that shape how orthopedic surgeons practice, and on the implications of those changes.
“Even though they may not rank with say, the move from wired to wireless, the changes affecting orthopedics today genuinely qualify as paradigm shifts—or, in other words, marked, transformative changes, ” said Azar
He cited the move from arthrotomy to arthroscopy as a paradigm shift for surgeons as well as the transition from medical record charts to electronic health records.
“What I think is different now, and very encouraging, is that we are riding the wave of change by embracing constant innovation, instead of feeling endlessly buffeted by the unexpected. I like to think of the Academy’s approach to managing change as ‘building a bigger box.’”
When it comes to the paradigm shift in practice management, he said the ACA has brought about a whole new list of unfunded mandates and acronyms.
While many of the greatest cost drivers, he said, are only marginally controllable, the revenue side is even more challenging as surgeons try to make informed business decisions and craft long-term strategies in the face of anticipated payment reform. He notes that many surgeons have been prompted by all this volatility to seek a hospital employment model.
“Does anyone doubt THAT amounts to a paradigm shift in a profession where independence is a part of our DNA? We realize that just as politics are local, so is healthcare delivery. Thus, we recognize that the best way for you to practice in your community differs from orthopedic surgeons elsewhere.”
Inspiring the Patient Lobby
Azar said another paradigm shift exists in the area of communications.
Since orthopedic costs constitute the largest portion of Medicare spending, orthopedic surgeons have frequently been seen as part of the healthcare “cost problem.” He pointed to the Academy’s “A Nation in Motion” campaign to raise awareness of what orthopedic services do and to highlight the value provided to musculoskeletal health in America.
This year the Academy plans to roll out the “Second Firsts” campaign to allow patients to give their accounts of how orthopedic surgery gave them another chance at getting back their quality of life.
“Can you imagine the potential, profound effect an informed army of our patients could have on decision-makers? We have a value proposition to offer to our patients and our ultimate goal should be to capitalize on it by making orthopedics a household name.”
Policy Agenda
Another paradigm shift, said Azar, has been the rise of regulatory advocacy.
The proposed Sustainable Growth Rate (SGR) fix is an excellent model of the Academy serving as an authoritative resource to members of Congress, he said.
The Academy’s top advocacy items include:
- SGR (Sustainable Growth Rate) reform
- IPAB (Independent Payment Advisory Board) repeal
- Bundled payments and value-based purchasing
- National and local coverage decisions
- Medicare audits
- In-office ancillary services exemption
- Medical liability reform
- Anti-trust reform
The ACA and Hammurabi Code
But, said Azar, the greatest paradigm shift today relates to the ACA, which includes pathways for both healthcare payment reform and delivery reform. The enactment of the ACA “is driving historic change in healthcare access, quality and cost.”
“And it was not a Trojan Horse. It is what we thought it would be—an unprecedented intrusion into our practices that threatens patient access to our expertise.”
But, he said, things could be worse if history is any guide.
“In the 18th century BC, the Hammurabi Code mandated that a surgeon be paid 10 shekels of silver every time he performed a procedure with his bronze lancet. However this code also mandated that if the patient died, the surgeon’s hands should be cut off.”
Since then, he said we have created a model of compensation based on services, not results. “But history seems to be repeating itself with proposed payment reform.”
Azar said we appear to be reverting back to the Hammurabi approach as payers are in fact metaphorically trying to cut off surgeons’ hands, even when the outcome may not reflect their efforts.
Value and Quality
“Value and quality are the buzzwords of the times, and the value equation promotes high quality, low cost services. We all know that these terms are euphemisms for lower reimbursements, but they also represent potential gains in efficiency by managing resources.”
Payers are demanding evidence of that economic value, he said and the Academy has been investing heavily in quality initiatives which must be done by surgeons
Azar said 2014 will be especially challenging due to the confluence of the ACA, Meaningful Use Phase Two and the start of ICD-10. He said, “Unbelievably, the number of diagnosis codes will increase by at least five-fold!”
He believes practice revenue will fall due to lost productivity, delayed reimbursement and higher claims denials. A recent AMA (American Medical Association) study estimates the cost of managing the ICD-10 transition will range from $225, 000 for a small practice to $8 million for a large practice.
“For the government, it will be all about more data collection. For us, it will not be what you do, but what you document.”
He believes that orthopedic surgery offers the greatest social and economic value in all of medicine, and it is paramount that patients have access to orthopedic care, regardless of the disruptive shifts in healthcare.
The Best of Times Ahead
As 30, 000 surgeons and industry executives headed home from the AAOS meeting and the hawkers and barkers packed up the Bazaar, the analysts opined their optimism for the year ahead. For Dr. Azar and his colleagues, they’ll be looking to capture that bundle, turn loose their patients on policymakers and harness the best technologies to get better, faster and more efficient and convincing payers of that value proposition.
