Participants included:
W. Michael Karnes, CFO and co-founder of Regent Surgical Health
Greg Koonsman, senior partner and founder of VMG Health
Deborah Lantzy-Talpos, RN, head of Aetna Hospital Solutions
Mark Madden, senior vice president of executive search with B.E. Smith  
Gordon Mountford, executive vice president of healthcare solutions at Huron Consulting Group
Michael Perry, MD, medical director at Laser Spine Institute

The following is an excerpted transcript of the event's discussion.

Scott Becker: Debbie, where do you see hospitals moving quickly to adopt ACO concepts? How do they work with Aetna?

Deborah Lantzy-Talpos: That's really what I see as the greatest current opportunity for health systems as pressure continues to mount for health systems and providers to deliver higher value care and accountability. Regardless of how you feel about how fast the transformation will occur in the delivery system, there's opportunity now to reduce costs and improve quality and safety.

The opportunity now is to really embrace clinical integration and accountable care. There's tremendous opportunity for high-performing health systems to partner with high-performing health plans to lower costs and improve quality. Aetna today is partnering and collaborating with health systems and provider groups across the country to deliver value-based accountable care.

Mr. Becker: Do you see hospitals more effective in managing care for their own population than the general population?

Ms. Lantzy-Talpos: There is a lot of variability there. I'd say there's been a lot of work done by health systems on managing their Medicare risk populations effectively and having that population under management. We have 69 collaborations focused on Medicare lives right now and making sure incentive reimbursement is available and information is being used effectively.

I'd say many more hospitals are taking on employee lives now as they build capabilities to manage risk and do population health improvement. With a large health system, and the number of employees who are self-insured, there is no down side to increasing the quality of care and safety for those populations while also reducing costs. The focus on employee lives is relatively recent, but at the same time, there have been some systems that have done a great job on employee lives.

Mr. Becker: Greg, what do you think are the biggest opportunities and threats to hospital systems today?

Greg Koonsman: Our background is in the transaction-related valuation. For the last almost 20 years now, we've been watching health systems and other providers go about their strategic imperatives. As healthcare reform became more and more of a reality, we saw the strategic imperative was to become both vertically and horizontally bigger. The vertical integration has been in the form of health systems acquiring physician organizations of all types, primary care and specialty care, as well as acquiring or joint venturing outpatient services in outpatient surgery, imaging and cancer.

Mr. Becker: This coming year, do you see more focus on horizontal integration or more focus on developing a vertically integrated system in a geographic area?

Mr. Koonsman: It started off as more of a vertical integration opportunity set, where health systems wanted to build physician networks and acquire providers right in their immediate sphere of influence. In last couple years, though, we're seeing a lot more momentum in horizontal integration — health systems trying to get bigger outside of their existing region. It's been a bit of a challenge, though, because of the fact that health systems have such a high leverage rate.

Generally speaking, systems are probably 70-75 percent debt related to the total value of the health system enterprise. With that kind of leverage and the fact that 80 percent of the market is non-profit, their only source if capital is tax-exempt markets. We're finding that horizontal integration is a real challenge for health systems because of the access to capital. That's why we're seeing many more non-profit and for-profit joint ventures.

Mr. Becker: Gordon, thoughts on the biggest opportunities and threats you're seeing across the universe of your hospital system clients?

Gordon Mountford: I think the opportunity is really to try and get ahead of the market, as the market shifts from volume to value. The pace of change in every market is different. For those in more fee-for-service markets that are shifting slowly, you have more time to prepare yourselves for the change about to come, whereas others find themselves already on the edge trying to figure out what they'll do to protect their revenue base while trying to figure out how to work in a capitated world.

The threat is if you're not ready, and haven't positioned yourself, you're in trouble. Some of the more innovative systems are making those investments organizationally and operationally, looking at the things they need to do to get their cost structure, strategy and relationships aligned as they move into this population-based management model.

Mr. Becker: Are there characteristics of markets that are moving quicker than others?

Mr. Mountford: That's a good question. There are certainly some influencing factors. Number one is the current market structure and what the relationships with payors are like. How aggressively are payors pushing change in that market? We're starting to see some markets where the large academic medical centers, which have kind of been sitting on the sideline because they've felt somewhat immune to a lot of the changes in the industry, now all of a sudden they're looking at market share and market strategies and pushing change within those markets.

There's a confluence of different factors driving the changes in each market. It's interesting that they are all in different places and the strategies all seem to be a little bit different. The one common denominator is really the cost structure.

Mr. Becker: So many hospitals have bought a lot of practices and done vertical integration to ready themselves for the future. What's the risk that some systems have left themselves with too big of cost or debt structures to react well to changing reimbursement?

Mr. Mountford: I think that probably holds itself true for a big chunk of the market. The horizontal evolution we're seeing falls in the clinical transformation area, [in which] how care is delivered across the continuum is driving some of the IT infrastructure changes that are needed, as well as the coordination of various caregivers. You can't look at it at a vertical basis anymore. You have to figure out how each of these dots is connected and how incentives are aligned to ensure the ultimate outcome is at the desired level.

Mr. Becker: Mike, can you talk to us about what you see as greatest threat and opportunity to health systems today from your vantage point?

W. Michael Karnes: The thing that concerns me as I look at our hospital partners is a real unevenness in the quality of their management teams and the way they run their businesses. [It's concerning] when you have a facility that has high cost, high leverage, and an income statement which is a substantial part of the cost structure that doesn't vary directly with revenue, and you lose revenue through competition or reimbursement going down. What concerns me is looking at hospital partners and seeing ones with high cost structures and weak balance sheets already.

I think the opportunity is the parallel side of the threats. The hospitals that have strong balance sheets and provide good services are able to consolidate through the industry to some degree.

Mr. Becker: Dr. Perry, you founded and built one of the most successful spine surgery companies in the country. Where do you see threats and opportunities for hospitals, or if you feel more comfortable, for the spine business?

Dr. Michael Perry: As far as opportunities, we work in ambulatory surgery centers. More spine surgeries are tending toward outpatient facilities. I think people see the advantage of performing spine in these settings: Hospital stay costs are down, infection rates are lower and of course comparable outcomes. I see that as a great opportunity for us. As for hospitals, that can be an opportunity or a threat. Hospitals now are trying to align themselves with ASCs and purchasing ASCs close by, so that's an opportunity, but if it's not owned by the hospital, then obviously it can be looked at as a threat.

Something to be concerned about is the entire U.S. healthcare system changes that will come with Obamacare. Nobody really knows what will happen ultimately, but in January 2014 is when the system will take place. We're preparing ourselves for that and looking at possible alignments with other healthcare organizations. The bigger you are, the more power you have. I also think that from an insurance perspective, with healthcare costs going up, reimbursement for ASCs might change. I think those are the biggest threats facing ASCs like ourselves.

Mr. Becker: How much concern do you have for payors trying to reduce the use of spine surgery as a way to treat spine and back pain, through either evidence-based medicine or discouraging spine operations?

Dr. Perry: I think that's great. I look at spine surgery as a last resort. We have people coming in all the time who injured their back three weeks ago. That's certainly not an indication for surgery, unless there's some neurological deficit. So we tend to take people who have been in pain for number of years and tried multiple conservative treatments. When those fail, or their pain is at level that interferes with their daily activities, then surgery might be answer. But if we can treat back pain and a herniated disc without surgery, I'm all for that.

Mr. Becker: Mark, with all the changes in executive suites today, are you seeing quicker turnover of CEO and CFO spots in hospitals and health systems, or about the same pace as before? How are all the changes in healthcare affecting the C-suite?

Mark Madden: We have seen an increase in the turnover at that C-suite level. It's been caused by a couple different things, and one is retirement. Those retirements are coming about either because of age, [or] we've seen some C-suite folks retiring earlier than anticipated because they've indicated they don't want to go through another major change in healthcare. They don't have energy, so they're leaving early. The other reason for the turnover is, when you look at integration, mergers and acquisitions, we're finding that some of those C-suite folks become displaced. Depending on where they are in their career, they may make a choice to retire for good or look for other opportunities.

Mr. Becker: Are there different C-suite skill sets people are looking for today than they were even five years ago?

Mr. Madden: It is very different, Scott, and I'll focus on a couple things, specifically at the CEO level. It's about building relationships but also about being innovative thinkers. We're going into a situation with our industry where we have an age of accountability. We need people open to looking at non-traditional alliances and innovative thinking. When we look at CFOs, for example: The baseline [skill] is to be very good technically and know their business. But we're seeing a softer side to those skills — to be an integrator, a good communicator and a good visionary. Five to 10 years ago, those weren't primary must-haves for your next CFO.

Mr. Becker: Debbie, you have insurers and systems trying to compete with some larger systems, such as the Kaiser model. How does Aetna work with a local hospital to be able to compete with a dominant hospital in a region?

Ms. Lantzy-Talpos: The Aetna vision is that we don't need to do complete vertical integration and acquire the delivery system. We're really looking to partner with high-performing providers. All of the investments we've made in care management and the ability to manage risk — we want to bring that to the table with the delivery system. Frankly, there's a very significant amount of change that needs to be addressed in the healthcare system as a whole. Aetna doesn't feel like it has the answer on its own. By partnering with the delivery system and providers, we think we will be able to compete very successfully. The ideal market to be working in is one in which competition is desirable. There are many forces in the marketplace that are pushing pricing to be more or less established. So it does feel like either the market or the government is pushing for prices to be pretty narrowly set.

Mr. Becker: Let me ask you a question, Gordon. How does a second size hospital in the market compete with the principal hospital in the market?

Mr. Mountford: That's a tough question. I think what you're starting to see are some new relationships formed, particularly in the second- or third-tier hospital community, where they're trying to figure out how to survive in this new age. I wouldn't call [Oakbrook, Ill.-based] Advocate Health Care a small system by any stance, but they are selective in the Chicago market in looking at selective relationships with the payors. The incentives are aligned appropriately to grab market share they wouldn't have otherwise. It's not necessarily a Kaiser model, but it's certainly a model that aligns incentives on the payor and provider side. In other markets with smaller hospitals, community hospitals are trying to figure out where they fit in and how they will survive. It takes many forms, from relationships with other health systems to new network strategies with their physicians. I'm not sure there's a single answer here. I think it's going to come in many forms depending on the market.

Mr. Becker: What do you see as differences in alignment of physician practices in rural markets versus metropolitan markets?

Mr. Koonsman: I think it somewhat depends upon how many hospitals or health systems are in those markets. What we're finding is if there's a competitive environment with more than one hospital, and one of those hospitals decides to start acquiring physician practices, then by definition, the other system goes on the defensive. It's really market by market and whether you have a high level of physician acquisition activity. Some markets are just now starting up.

Mr. Becker: Mike, are you seeing markets you're in affected by physician employment?

Mr. Karnes: The employment issue — we faced [it and] lost some doctors we didn't want to lose. But, in general, it hasn't been an issue we haven't been able to work around. I think it's market specific and also determined by the power physicians have in a market. If there are a lot of single practitioners or small practices, I think they are much more susceptible to these pressures. If they are larger groups, I think they can stand up to payors and hospital systems and have more control. I've seen larger practices not only move cases from one hospital to the other, because they didn't like the direction the one hospital was taking, [and] I've also seen a large single specialty practice [get] better compensation for their surgery centers than what a large community hospital was able to get, largely because of the power of the physician group. I think to a large degree, it's determined by how physicians are organized in the market.

Mr. Becker: Dr. Perry, when expanding nationally, what's your thought on customer and patient analytics, or is it more about finding the right spine surgeons? And also, how much is the device tax impacting Laser Spine?

Dr. Perry: When we're looking at opening up [in a new] market, we don't [necessarily] look at where the surgeons are based. We look at demographics of the patients, the insurance [market] and the population within a certain radius of an area. Also, since we're a company not solely owned by physicians, there are state laws that don't allow us to practice in certain states, such as California. Another thing we look at is certificates of need. CONs would be a little bit more expensive, so we try to steer clear of those. We look at all avenues and pretty much do our due diligence when serious about expansion.

The device tax is not really having an impact on us per se at this time. We don't produce devices, but they are the products we use. Are those [prices] going to go up? I'd say probably. They will pass it onto the consumer, and we're the consumer. I can just see that tax being levied to people who purchase medical devices.

Mr. Becker: Gordon, let me turn back to you for a couple questions. Are you starting to see your clients look at the sequester — its potential impact on hospital revenues and the ability to invest? Has that been an issue itself? Or, separately, have reimbursement concerns led hospitals to generally be more concerned about spending going forward, whether IT or other things?

Mr. Mountford: I think it's probably more the latter than the former, but the right answer is probably all of the above. I think sequestration and the reality that healthcare reform will impact business overall is driving everybody to make the changes that they needed to, probably several years ago. A lot of people sat one sidelines until six months or a year ago, and now you're seeing a huge focus on cost reduction and getting the organization to the right size given where they think they'll end up in the marketplace.

Mr. Becker: You see more and more of the bond rating agencies starting to reduce credit scores for hospitals. There are more reports of hospital layoffs. How much of an atmosphere out there do you see with hospitals battening down the hatches, or do you still see systems looking at serious investments and growth?  

Mr. Mountford: We're seeing both. Larger health systems, those that meet the definition of large integrated delivery networks or faith-based systems, that have capital to withstand some of the more immediate challenges are making investments to really understand what clinical integration means within their organizations. They are also starting to make acquisitions necessary for them to manage health at a different level. I also see just the opposite. This is probably more of your smaller/midsize providers that just have a simple cost problem. They have debt requirements that are being challenged in the short term. Also, as they look out over next year or two [and] changes in reimbursement, if they don't get their costs aligned, they'll be in trouble. It's really market by market.

Mr. Becker: Mark, two questions. The individual hospital not affiliated with a chain or larger system — how often do you get a panicked call from their board of directors, saying, 'We need to find a new CEO or CFO today or tomorrow?' Is that more prevalent today than a few years ago? What's your sense of the independent hospitals that are reliant on their own talent pool versus being part of larger system?

Mr. Madden: As all of the panelists have talked about, as margins get tighter and relationships are much more under the microscope, CEOs and CFOs specifically have much less margin for error. When they sense things are wrong or are not going in the direction they feel is going to be long-term for them, they make sudden decisions and leave. We get those questions quite often. The difference we have now is that, in the past, when board members called and talked about candidates, they wanted somebody who helped them maintain independence. That has changed fairly dramatically. Now they want someone who can think with a broader vision: 'When would it be appropriate and what would be the right kind of opportunity for us to form an alliance or integrate with someone else?'

Mr. Becker: How much M&A activity are you seeing where a hospital is buying a hospital in a neighborhood adjacent to it, versus a national chain buying something in a completely different area than their core base? How much activity is truly local within a couple counties versus national?

Mr. Madden: I'd say it's maybe 50-50. We do see a lot of activity local because they feel like they know that market. Larger organizations, especially a couple of the large Catholic-sponsored organizations, obviously we're seeing that in a much broader perspective nationally.  

Mr. Koonsman: Any time one of these hospitals with single-digit margins facing uncertainty goes for sale, we see the strong, local players bidding for it, and for-profit chains bidding for it. But the new entrant to the fray are the large, non-profit systems. The national systems like [Livonia, Mich.-based] Trinity Health, [St. Louis-based] Ascension Health and [San Francisco-based] Dignity Health. What's really interesting is that one can move very, very fast and has lots of capital — the for-profit providers — and one has more limited ability to move quickly and pay up. I think what I'm seeing is the big, non-profit national players are getting much more involved in acquisition activity and are getting better and better at competing with for-profit providers for deals.

Mr. Becker: How much M&A activity is funded by private equity and for-profit investors versus non-profit investors? What's your breakdown?

Mr. Koonsman: I think all you have to do is go back to the bond markets and start doing some analysis. You recognize that, if you look into the future, the bond rating agencies have a very difficult time not seeing more headwinds than tailwinds for these large systems. That's their challenge. The tax-exempt bond market is not the greatest place right now for these systems. I think we'll see much more activity in non-profit and for-profit joint ventures for an acquisition.

Mr. Becker: Dr. Perry, how much measurement of patient satisfaction are you seeing and doing? How important is it?  

Dr. Perry: We take patient satisfaction extremely seriously. We like to look at our facilities as patient-centric. Our patient satisfaction is around 95 percent. Considering we're doing spine surgery, we have an 85 percent success rate. We follow patient satisfaction between all of our surgical centers and have friendly competitions between surgery centers on who will have highest patient satisfaction for the month. It's extremely important from our perspective. I think every healthcare facility should feel the same way.

Mr. Becker: Mike and Gordon, how much are you seeing in terms of your centers or clients spending more or less effort on satisfaction scoring?

Mr. Karnes: We do patient satisfaction surveys every month. We also survey physician satisfaction levels and employees, and we monitor those about twice a year. We feel physicians are as much of our customers as the patients are, and it's important for us to survey them as well. We take that very seriously.

Mr. Mountford: I think [they're putting] a lot more [effort into it] than they used to. These providers are going to have to create stickiness beyond anything they had before. Really understanding what's expected to attract patients on a more sustainable basis will be critical in an ACO environment.

Mr. Becker: Debbie, your thoughts on patient satisfaction? How are hospitals tackling it?

Ms. Lantzy-Talpos: Patient satisfaction is really that third leg of the stool: Lowering costs, improving quality and improving patient satisfaction. Satisfaction and engagement is a critical component of what we're trying to do. We learned from the failure of managed care in 1990s, when there wasn't emphasis on patient satisfaction. In this current accountable care organization and patient-centered medical home environment, there is so much emphasis on capturing and engaging patients. I think it's incredibly important, and we're looking at all different ways to measure engagement and satisfaction.

Mr. Becker: Are you seeing a de-Catholicization of healthcare? Mark, any thoughts on this?

Mr. Madden: There have always been traditional alliances, [but] now we're seeing so many changes and that is one of them. We're seeing that. It depends on the market. It depends on what large systems, and whether they're for-profit or non-profit, are active in the marketplace. It has changed, and I expect it to probably continue to change.

Mr. Becker: Any other thoughts on growth or decline of religious institutions?

Mr. Koonsman: All you have to do is look out West and see what Dignity Health did. That creates a bit of a trend. I believe really the necessity to survive and thrive is going to outweigh anything. If you have a Catholic health system and the best business course of action is to affiliate, sell or merge with a non-Catholic organization, I think you're going to see more of that. I believe those systems would probably prefer to stay within a Catholic organization, but they might not have a choice. It may not be the best business decision.

Mr. Becker: We have time for each person to give one final thought on what they think is the most important thing for health systems to do right now.

Mr. Madden: We're going into a time when the workforce will be evolving and changing. A lot of people will be leaving, and we have multigenerational diversity, much more so than we have had in previous 20 years. I think organizations that will be successful are those that create environments that support high-performing leaders and workers, and generational diversity. And being able to identify those high-performers and retain them long-term, because there will be a war for talent as we see a shrinking in the availability of strong leaders at mid- and high-levels of leadership within an organization.

Dr. Perry: I think it's patient satisfaction. Outcomes are important. Combining surgical outcomes with patient satisfaction — I think that's what healthcare companies really need to start focusing on. If we're going to come into a payor system that will send patients to more better outcome-based facilities, that will ultimately be a win-win.

Mr. Mountford: Focus on the fundamentals. Understand truly who your market is and where you'll end up. And prepare yourself for the day when the last fee-for-service bill goes out the door.

Ms. Lantzy-Talpos: I agree with the previous comments, but in particular the idea of focusing on building a healthy, high-performing workforce and prepare for population health management now. Get going early. Do whatever can be done to lower costs now — operating efficiencies, reducing the costs of care and eliminating practice variation.

Mr. Karnes: Two things: Treat your business as a business. When you're making capital decisions, in the coming world, you have to treat it like a business. And secondly, treat your doctors as partners. That will help open recruitment and retainment.

Mr. Koonsman: The big issue will be the significant reduction in the cost structure of healthcare while maintaining patient satisfaction and not having a replay of the '90s where we tried reducing costs significantly but it kind of backfired in quality and patient satisfaction areas.

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The taper connection between the sleeve and the base may not be able to accommodate the physiologic loads that occur during normal activity. If loads fracture the sleeve at the taper joint, it could lead to loss of function, loss of limb, infection, compromised soft tissue or death, according to the report.

A Class 1 recall is the FDA’s most serious warning. Hospitals and surgeons should immediately stop distributing or using the recalled lots. Currently DePuy is not recommending revision or follow-up for patients without symptoms.

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The SRP generates 3-D models based on standard scanned images from patients that show the interaction between tissue and surgical instruments. The pre-surgical analysis offers a rehearsal for surgeons and is ultimately designed to reduce risk and maximize outcomes, according to the report.

The device was released late last year after patent approval. Currently, the University Hospitals Case Medical Center in Cleveland uses the technology for clinical studies.

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"Value based purchasing is one of the best things I have seen in healthcare reform," says Dereesa Purtell Reid, MBA, COO of Hoag Orthopedic Institute. "The new system gives hospitals a score card, which has your total performance score based on quality measures and patient satisfaction. Now consumers will be able to see this information and we know any time consumers can receive more information and be educated we can make better choices with our dollar."

Ms. Reid discusses the benefits of value-based purchasing and how it can improve orthopedic care.

1. Benchmark can help hospitals improve. Collect data from your hospital as part of your program and benchmark against other providers constantly. Electronic medical records and other IT programs allow providers to gather data on each facet of care much more easily — from early identification of out range lab tests to room turnover times — just a few examples that make an impact on quality and efficiency of care provided.

"We've collected quality data and passed it out to the frontline employees in our organization," says Ms. Reid. "Sterile processing staff can see infection rates and know how they contribute to that in their own individual role. We recognize our employees they are doing a great job when we see our patient satisfaction scores, but we break it down even further to show each team member how they are contributors to value based purchasing every day."

With Value Based Purchasing data, hospitals can benchmark against themselves nationally to see where they stand compared to other providers.

"Many hospitals are implementing various layers of information technology to meet the electronic health record standards," says Ms. Reid. "That's a revolutionary process for any hospital, and once a hospital implements clinical documentation, then core measures and quality data is more robust and accessible because of real time reporting capabilities."

2. Clinical outcomes are better. While cost is an important benchmark to follow, clinical quality is still the main focus of value based purchasing programs. Without excellent outcomes, hospital reimbursement will be ultimately be impacted.  

"We are focused on the value equation, cost and quality. We understand that great quality is important, but we also need to provide great value to our patients and payors," says Ms. Reid. "We vet the cost of supplies and decide whether we can purchase a less expensive item that has the same great quality for patients. At the end of the day, we believe that if we stay focused on quality and great value, and keep those metrics in front of our team, we'll have a great strategy for success."

There are many changes coming forth as a result of healthcare reform, including declining reimbursements, and providers must be prepared to meet those challenges head-on.

"The people who survive in healthcare reform will be able to provide reasonably priced healthcare and excellent outcomes," says Ms. Reid. "It's easy to be sidetracked on the overwhelming sea of demands and opportunities in the world of healthcare. It's our job to simplify it and help people stay connected to the top priorities."

3. Builds a more cohesive team. By working on value based purchasing initiatives and transparency, members of the HOI team become more cohesive and were able to improve employee satisfaction. After opening as a separate hospital from Hoag Hospital in November 2010, they began tracking employee satisfaction last year.

"It's important for hospitals to survey their employees regularly," says Ms. Reid. "We rank very high on employee satisfaction. There are studies that show a direct correlation between happy staff and patient satisfaction."

Ensuring that employees have the materials necessary to do their job and that they are involved in solving problems as well as providing suggestions are all aspects that build a solid team. Administrative leadership as well as physicians pay attention to staff feedback on employee satisfaction surveys to ensure sure morale stays high as well as outstanding patient satisfaction.

"It's one thing for the administrative leadership to be engaged and sensitive to employees, but our physicians are in-tune with our employees, they easily give credit employees for their contributions," says Ms. Reid. "Our surgeons were so pleased with the results of all value-based purchasing measures that they took this information as an opportunity to complement the employees on a job well done. This was another way we were able to connect employees to their individual contributions to the clinical outcomes of our patients."

4. Data gathering helps prepare for ACOs. Accountable care organizations are arriving in new healthcare markets every day, and many providers are opting to join. Hospitals that collect clinical data will be in a good position to transition into an ACO, or another population payment model in the future.

"As we evolve into ACOs, we begin to shift and think about caring for the patient over a longer episode of care as well as preventive treatments," says Ms. Reid. "At HOI, we are looking at patients to see if they have a healthy weight range to undergo surgery; if not, we have them deal with weight loss before elective procedures, which improves their ability to recover from surgery and the lifecycle of that joint replacement."

Optimizing surgical results is important, as payors are switching to a pay-for-performance model and shift more risk onto the provider with bundled payments or other risk payment methods. Focusing on the value of care provided can improve quality as well as lower cost on the overall healthcare system.

"I believe value based purchasing is actually moving at a faster pace than perhaps other commercial payers," says Ms. Reid. "Also, value based purchasing results will be very beneficial for self-insured employer groups — executives who are making decisions on behalf of employees make a more knowledgeable decision about the providers they choose for their employees. I think value-based purchasing is moving forward in a really positive way."

5. Improves transparency for consumer choices. Part of HOI's commitment to quality includes publishing results publicly. The hospital's 2012 report includes information about infection rates, patient satisfaction, complications, length-of-stay and readmissions.

"We are all about quality and we wanted to open up to show people our results," says Ms. Reid. "Data transparency pushes the hospital to be the best and once the information is public, it really sets the bar to sustain those numbers overtime."

To collect the data, HOI created a team that includes clinical and data management professionals as well as a technical writer to publish the data in an accessible format. The data also compares quality measures to the national standards.

"We benchmarked ourselves discovering that people not only wanted to know about how we are doing but also about process improvement," says Ms. Reid. "We published a book where you can see information about prescreening patients for infections and how we treat before surgery. You also see a number of performance improvement initiatives, such as how we are keeping patients warm during surgery because a consistent temperature reduces infection rates."

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Dr. Derner practices with Associated Foot & Ankle Centers of Northern Virginia in Lake Ridge/Stafford. He is also the chief of podiatric surgery at Stafford (Va.) Hospital and is past president of the Virginia Podiatric Medical Association.

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Dr. Jacobs specializes in hip and knee reconstruction and is chairman of the department of orthopedic surgery at Rush University Medical Center. Dr. Jacobs had served as chair of the Council on Research, Quality Assessment and Technology of the AAOS, past president of the Orthopaedic Research Society and past president of the United States Bone and Joint Decade.

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DePuy Synthes Joint Reconstruction's GLOBAL UNITE Platform Shoulder Arthroscopy System has been released in the worldwide market. The GLOBAL UNITE is designed to help return the shoulder to its correct anatomical position.

AxioMed has released the Freedom Cervical Disc in the European market. The device was successfully implanted in Switzerland.

Mazor Robotics has been given approval to market its Renaissance robotic spine system, the only technology of its kind on the market, in Taiwan and Canada.

Medtronic has developed a line of spinal cord stimulators that are MRI compatible. The device has been introduced to the European market.  

Zimmer Holdings introduced its V2F Anterior Fixation System, the first lateral plate system for spinal trauma. The implant is created for thoracolumbar burst fractures, disc degeneration and tumors.  

Hydrocision has released its herniated disc pain relief device. The minimally invasive device was originally created to prepare a disc for an implant, but is additionally being marketed a pain relief device.

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Q: Why did you decide to add a travel program to your practice?

Dr. Arnold Feldman: We have treated patients who live throughout the United States and internationally for many years and the demand for our services by patients living outside Louisiana is rapidly growing. The travel program was created as a value-added resource for these patients. It supports patients when planning their visit to The Feldman Institute in Baton Rouge and helping to relieve some of the stress of traveling. We want to ensure patients traveling to us can spend their time focusing on improving their health.

Q: What steps did you take to build The Feldman Institute Travel Program?

AF: Initially we referred patients to suitable hotels and gave them information on events and activities in Baton Rouge. From there, we evolved into designating local hotel and restaurant partners to further assist our patients. Now we have an assigned member of our staff to serve as a concierge for our patients traveling from outside Baton Rouge, throughout the country and internationally. This staff member is available to help coordinate their travel, hotel, transportation, meals and schedules, and provide another additional service requested by patients.

Q: What challenges did you face when launching the program and how were you able to overcome them?

AF: The biggest challenge is managing the entry of patients coming into the country and determining the details of their travel. We have overcome those issues by recruiting a dedicated staff member who is experienced in handling these matters for patients. Having a patient concierge has solved many administrative issues for us as well as enhances our patient care to an even higher level.

Q: What trends are you seeing in the types of patients taking advantage of the travel program? Has it been successful?

AF: The trend for patients traveling for healthcare is growing by leaps and bounds. Medical tourism is a significant sector of the healthcare economy and from all that I have witnessed in my own practice and read it will only continue to grow. It's interesting to note that I see patients from all sectors of the economy taking advantage of travel programs for their healthcare. Patients are looking for the best, most innovative care available to them, and they are willing to travel if that's what is necessary to return to the quality of life they had before an injury or illness.

Q: Do you have any plans to grow or add to the travel program in the future? What are your goals for the program?

AF: We are going continue to expand our travel program and its services to meet the needs of patients. We are looking at adding structured events for patients and their families, as well as identifying people in the community who can help them during their visit to Baton Rouge. We are also exploring networking opportunities for them to meet other patients and their families to learn more about the experience of coming to The Feldman Institute for their care. Our goal is to truly make this a very comforting, healthy, restful experience for all that results in patients returning home feeling significantly better than when they left.

Q: Where do you see concierge medicine and medical tourism in the United States headed in the future?

AF: Concierge medicine and medical tourism in the United States is destined to become a standard of care. I think we are at its tipping point and believe healthcare reform will further fuel demand.

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Currently, patients who sue healthcare providers in Utah must first move their cases through a pre-litigation panel — a process designed to identify frivolous suits.

Often, providers who aren't at fault are named as parties in the suit and are called before the panel. For instance, if a physician removes a sponge that was left in a patient by another physician, the provider who removed the sponge would also be named in the lawsuit.

The process is structured this way to protect patients from the statute of limitations, according to the report. If evidence surfaces throughout a trial that finds another provider involved in the patient's care to be at fault for the medical malpractice, it could be too late for the patient to sue that physician.

This bill seeks to alter that process. Under House Bill 135, accused providers would be required to summon other potentially guilty parties to the panel. It would no longer be necessary for plaintiffs to name the parties. Also, under the bill, accused providers would not be required to report a summons to malpractice insurers and hospitals unless they are found by the pre-litigation panel to be at fault, according to the report.

The bill is headed to the state House of Representatives.

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The newly released spine implant will build on the success of the original Zimmer DTO System, which connects several other Zimmer devices. The DTO 5.5 consists of a 100 mm cord and a 5.5 mm titanium rod to be contoured to the patient's anatomy.

The transition from fusion to non-fusion within a single implant is designed to preserve segment anatomy and restore posterior disc height, according to the release.

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Stuart Freed, MD, chief medical director of Wenatchee Valley Medical Center, first proposed the addition of a spine center 18 months ago.

Two physiatrists have been added to the staff of the spine center, which is located on the third floor of the medical facility along with neurology and neurosurgery.

The Wenatchee Valley Medical Center was first opened in 2005.

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Of the physicians willing to participate in an accountable care model, pay-for-performance beat out bundled payments and shared savings agreements as their preferred accountable care payment model.

The following is a breakdown by specialty of physicians willing to participate in an accountable care arrangement:

•    Anesthesiology: 73 percent
•    Primary care: 61 percent
•    Psychiatry: 60 percent
•    Surgery: 55 percent
•    Radiology: 55 percent
•    Emergency medicine: 44 percent

LocumTenens.com surveyed 1,416 physicians, including those who were locum tenens and permanently staffed, in a wide range of specialties for this survey.

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Dr. Groh has also been reappointed to the Education Subcommittee for the 2013 AAOS annual meeting.

Dr. Groh is a board-certified orthopedic surgeon at Blue Ridge Bone & Joint and is assistant editor for the Journal of Shoulder and Elbow Surgery.

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Drake Lamen, MD, president and CEO of Chenango Memorial Hospital, thanked the community organizations that helped cover the cost at a ceremony last week.

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1. Analyze costs for savings opportunities. Understand where the big cost centers are for spine care so you can locate opportunities for cost reduction. Spine surgeons should be part of this process because if they don't know what the procedure costs, they can't find areas for savings.

"The first step in cost cutting is measurement and the second step is breaking down the entire costs for the procedure from A to Z," says Bryan Oh, a neurosurgeon who focuses on spine surgery at BASIC Spine in Orange, Calif. "Once you have a sense of that you can see the opportunities for cost improvement. I think that's really important because if you don't even know where the big cost centers are, you will be taking a stab in the dark."

The biggest costs associated with spine surgery are often implants, medications and 30-day readmission rates. Collect the DRT data for each spine center surgeon and discuss the variance.

"They have to engage the surgeons to see how much the procedures cost," says Dr. Oh. "Once the surgeon has a handle on the data, start lowering that rate. Demonstrate you can lower the rate and present that data to insurance companies, which will really make you a preferred provider."

2. Renegotiate instrument and implant costs. Instrumentation and implants are likely the biggest cost center for a single case and there are plenty of opportunities to knock those prices down. First consider whether you need a brand new microscope or the latest implant generation; if not, you can save by continuing to use your original microscope or purchasing commoditized implants for wholesale prices.

"The first thing to realize about cost savings is that sacrifices are going to have to be made in terms of the instrumentation, haemostatic agents and other products that are our favorites," says Brian R. Gantwerker, MD, of The Craniospinal Center of Los Angeles. "We'll have to part with them or renegotiate our prices. In order to maintain quality of care at a reduced cost, we ourselves will also need to do our own cost cutting."

Streamlining the implants so everyone in the group uses the same devices will give you more power to form an exclusive agreement and negotiate prices down for individual implants. More hospitals now are partnering with surgeons to help them during vendor contract negotiations.

"If we are going to do a fusion, pedicle screw case or especially biologics, surgeons have to very aggressively be involved in contract and price negotiations for the product," says Dr. Gantwerker. "I was working with a hospital in Southern California and did negotiations for their microscope and operating room table, and I was able to work down the price by working with two different companies. As a surgeon, you have clout because you are bringing these devices into the operating room. Some surgeons are reticent of getting into the dirt, but for cost effectiveness it's important."

Dr. Gantwerker recommends surgeons first determine a price based on what their budget allows and then ask for 10 percent to 20 percent below that price initially. As each side negotiates to the middle, surgeons should be able to hit their target price. However, they should also be willing to walk away if necessary. "You have to picture it like buying a new car and be willing to leave," says Dr. Gantwerker. "Ninety percent of the time they will be back with a better price; however being willing to cut your losses in case they do not is extremely important."

3. Embark on online and social media marketing efforts. If your practice is looking for ways to connect with current and potential customers to increase retention, word-of-mouth referrals and gain new patients, social media is an inexpensive, direct way to do so. However, the world of social media is new, vast and can be overwhelming, so it is crucial to develop a plan before embarking on social media outreach. Identifying your target audience, finding out what social media platforms they are using and strategically entering into their conversations through applications and advertising is the best approach. It's also critical to budget time within your workweek to manage the content and allow the project several months to grow. Assign an office manager or hire an outside marketing agency to assist in the planning and implementation of social media strategy.

4. Bridge the gap between surgeons and hospital executives for a productive relationship. Hospital executives and independent spine surgeons have traditionally been on opposite sides of the spectrum when it comes to managing the spine hospital service line. However, more surgeons and hospitals are taking advantage of the opportunity to come together around a mutually beneficial goal — providing great patient care — while also sharing in savings and revenue generation.

"We have to recognize that one of the primary motivators for both hospitals and surgeons is revenue," says Scott Gibbs, MD, founder of Brain and NeuroSpine Clinic of Missouri and director of the Southeast Missouri Hospital's Brain and Spine Center, both in Cape Girardeau. "I think revenue opportunities are very important and we have to inspire others to work toward a mutually common goal. Surgeons need to take the lead with hospitals and craft a vision that is mutually beneficial for the hospital and the surgeon."

These partnerships could come in the form of co-management arrangement of spine service lines, collaboration to construct a comprehensive spine "center of excellence" or a joint venture surgery center, among other arrangements. "The surgeons and the hospitals have to create a vision that is big enough to include both parties," he says. The future may bring additional challenges and opportunities for surgeons and hospitals to partner and share revenue gains, especially in accountable care organizations.

"What we need to do is create a comprehensive bundling of surgical procedures, postoperative care and pain management so there is one price for everything," says Dr. Gibbs. "Then we will have to negotiate with hospitals for our fee. The hospital has to understand that they must participate in developing the best treatment plan for their patients. Surgeons need to organize that for the hospitals because hospital executives don't practice spine surgery, so they sometimes under appreciate its nuances. We need to craft that vision for them and have the leadership to deliver it."


5. Reward staff members for efficiency. Since efficiency is absolutely key for spine practices to maintain a healthy revenue cycle, reward members of your staff who are the most efficient. This can include employees who are taking care of patients well and making sure all of their responsibilities are completed each day.

"We try to reward the people who are most efficient," says Terrence Crowder, MD, a spine surgeon with Sonoran Spine Center in Mesa, Arizr. "We perform routine audits of patient charts and survey patient satisfaction, which is a factor in whether people receive a raise or bonus. We are constantly evaluating our staff to make sure they are doing a good job of taking care of patients and keeping them happy."


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The TOPS system is a polyurethane unit that is fixed to the spine and designed for motion preservation, unlike fusion which eliminates of the three motion segments. The implant can be used to treat spondylolisthesis and lumbar spinal stenosis.

So far trials have been conducted in Belgium and Israel, and have shown patients to have significantly better results than with fusion, according to the release. However, the Premia system is also more expensive and may not be covered by insurance.

The TOPS system is available in Germany, Austria, Britain, Turkey and Israel. Premia is conducting clinical trials in the U.S., and it could take five years for FDA approval.

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The PediGuard system improves surgeons' pedicle screw placement during lumbar spine fusion.

The company will partner with Moscow-based Multi-Systems Technology to distribute the device in Russia. SpineGuard achieved clearance through collaboration with MST, which specializes in neurosurgery, spine surgery, trauma and orthopedic devices, according to the release.

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Members of the Professional Football Athletic Trainers Society presented the award. Dr. Cooper has been the head team physician for the Dallas Cowboys for 13 years and joined the organization in 1992.

Dr. Cooper was previously affiliated with the Dallas Stars and is past president of the Texas Society of Sports Medicine.

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"We are seeing changes in healthcare in general that are basically consolidating resources into larger entities, whether hospitals, physician organizations or other institutions," says Fred Davis, MD, principle at ProCare Systems and a physician with Michigan Pain Consultants. "That's part of what is driving physicians to sell their practices. However, these changes are also creating opportunities for private practices to continue to thrive."

Dr. Davis discusses the five biggest factors driving physician practice sales and how surgeons can avoid selling in the future.

1. Regulations from healthcare reform. The Patient Protection and Affordable Care Act and changes in the private sector have made it more challenging for small practices to sustain business because they must purchase expensive electronic medical records systems, and invest infrastructure to comply with increasingly more complex regulations. All of this is occurring while reimbursements are continuing to decline.

"The government and other payors are moving toward alternative payment mechanisms which create more uncertainty that can be daunting for physicians," says Dr. Davis. "The other area causing a shift is in Health Information Technology; not just the EMR but also programs that are managing the process of patient care within the practice. These process changes are becoming increasingly complex and costly. Physicians must have a higher level of practice sophistication to be on the same playing field as larger institutions."

Physicians aren't sure of their future income and with increasing costs and administrative needs, financial pressure has built.

"The physicians aren't sure of their future income streams amid increasing costs," says Dr. Davis. "They are seeing increasing administrative needs and more financial pressures, which creates uncertainty about the future. In 2011 and 2012 there were several Medicare payment freezes because of budget impasses This makes strategic planning more difficult because things are changing so rapidly."

Private physician practices that have decided not to sell to a hospital often seek consultation with management companies or professional expertise to help them with the business side of running the practice.

"Working within a more professional management environment can allow your practice to thrive," says Dr. Davis. "Companies can provide services and infrastructure that the physicians couldn't do themselves, such as administration, HIT, strategic planning and contracting with payors. Working with a practice management organization gives them the heft they need to maintain their private practice."

2. Work expectations are different among young surgeons. A demographic shift has taken place in the types of people who are going into medicine.  

"Medical school classes now are at least 50 percent female," says Dr. Davis. "We are seeing a much more rounded mix of people going into medicine and the younger physicians are different in terms of their feelings about work/life balance. This is especially true for women in medicine because of childbearing and family responsibilities. However we are also seeing more male physicians sharing childcare and family responsibilities. These physicians want to have more time for family and personal interests. As a consequence, there is a shift in physicians seeking employment opportunities in larger practices or institutions that can provide more flexible work schedules."

Some in healthcare have also noted a personality shift in surgeons as well. Orthopedic and Neurosurgeons who were once considered  independent and entrepreneurial are no longer seeing the value of owning their own practices and are now content to become hospital employees, says Dr. Davis.

"The younger people going into medicine are intelligent, have a spirit of wanting to help people and practice good medicine, but they aren't as business oriented as they were previously," says Dr. Davis. "They want to feel like they are contributing to a greater good and have relevancy in their professional lives but do not equate that with private practice."  

These factors are contributing to the difficulty in recruiting physicians into existing practices. As a consequence, there is a decrease in the pool of physicians who would typically buy into the practice over time which makes transition planning more difficult for the senior physician owners

3. People are less connected to their physicians today. Traditionally, people expected physicians and surgeons to stay in their communities and take care of them and their families from one generation to the next; this is no longer an expectation in medicine. Patients are getting used to their physicians and surgeons leaving the hospital — or the community — and seeing a new practitioner more often when they seek medical care.

"We are seeing a shift of physicians coming out of training, who are already heavily in debt for their education not wanting to be burdened by the additional debt it takes to buy into private practice. At the same time, they do not feel committed to stay employed by the same hospital either," says Dr. Davis. "The sometimes predatory employment contracting practices of large institutions have contributed to the rise in nomadic physicians who don't have to worry about big expenditures and aren't tied financially to a practice or location."

Younger surgeons are also more comfortable with the idea of their employers doing the marketing for them. They are not as dependent on personal relationships with their referral sources and can use new social media to directly reach their potential patient base in any given location. Because they may not have the same outlook on the business of medicine and their careers as older physicians, it is easier for them to have more mobility.

"Younger physicians may not be as financially driven as older physicians were and they have other values," says Dr. Davis. "You don't have the same motivations and financial responsibilities when you are an employed physician. Working in a larger institution, you are another line item on their budget. There isn't that social contract employers used to have and if surgeons become employed but they aren't treated professionally, and their financial status isn't maintained, they can move to another opportunity."

Dr. Davis says he is beginning to have a better time recruiting physicians than in the past, as some of the physicians that were employed by larger institutions are now looking to return to private practice.

"What is driving them away is their perception of being treated as a commodity in an increasingly impersonal institutional environment and not feeling like they are contributing in a meaningful and personal way to the care of their patients," he says. "What is attracting back into our private practices is the potential of providing high quality patient centered care. This can be achieved by having an effective data driven clinical care management system and ongoing research initiatives to demonstrate quality.  I think we will see a certain degree of rebounding over the next several years with physicians coming out of employment that want to be treated more professionally, feel relevant and be in charge of their destiny."

4. Primary care physician employment by larger organizations. As hospitals and healthcare organizations increasingly employ primary care physicians, private practice specialty physicians may see referrals dry up unless they are aligned with the referring entity. Without ample patient flow from referral relationships built over the years, some orthopedic and neurosurgeons may feel they have few options other than to sell their practices and seek hospital employment themselves.

"Getting your referrals isn't as easy anymore because now referrals are made because of the network you are in," says Dr. Davis. "Private practice surgeons are looking at other ways of driving patient referrals and profitability."  

Some groups are looking at these circumstances as an opportunity to develop different models of private practice.

"You can make adjustments in your practice to meet the needs of a changing healthcare environment" says Dr. Davis. "You also have the ability to capture patients that don't want the Wal-Mart approach to medicine. They want a more personalized approach. In primary care we are seeing a trend toward concierge medicine and arrangements that are more private where there is a quality focus oriented around the patients' needs instead of the institutions'."

Specialist physicians can also choose to develop newer patient focused practice models to help remain successful in private practice by hiring an outside company to evaluate their business and advise them of opportunities.

"Sometimes the smartest thing to do is have someone look at your practice that understands the healthcare system at the macro level and knows what is happening in your practice at the micro level so they can help you navigate through this, identifying challenges and opportunities," says Dr. Davis. "They can address the gaps for moving forward to the next level. It's too daunting for many so they give up their practice or sell it to the hospital becoming employed as a last resort. But, if they were to take the step of working with someone who could give them another perspective, I think they could have a better chance of staying in their private practice and thriving."

5. New medical neighborhood care models. Organized Systems of Care, Accountable Care Organizations and the Patient Centered Medical Home (PCMH) are driving the "medical neighborhood" approach to care. These initiatives encourage population based care, which focuses on providing services to treat the patient as a whole and demonstrating cost and quality benefits. Practices that can demonstrate that they have high quality clinical outcomes that contribute to improving the lives of their patients have a better chance of participating in these entities and maintaining their independence.

Private practice surgeons can also participate in more than one OSC, whether run by the hospital or group of physicians.

"The public and private payors are developing creative reimbursement mechanisms partially based on where you can find savings elsewhere," says Dr. Davis. "If the private practitioner can demonstrate that they can reduce excess costs in the healthcare system, they can have a seat at the table."

OSCs place more risk on the providers. However, this can produce rewards under the right circumstances.

"Demonstrating their value allows private practices to negotiate effectively with the large systems of care," says Dr. Davis. "There are tools that can be used to demonstrate clinical quality, provide more efficient care management and manage risk that allow private practitioners to compete with larger entities. Using data to advocate for your patients and your practice can overcome the politics involved in being selected to participate in these OSCs.”

The keys to successfully maintaining a private practice are having a strong patient centered clinical approach, focusing on providing documented quality and value based care and understanding how to recruit new physicians to the practice.

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Symmetry Surgical, based in Nashville, has partnered with Italian device company Biocommerciale. The partnership will allow Symmetry Surgical to expand its portfolio of surgical instruments to the European market, part of the company's effort to forge a global presence. Symmetry Surgical has also signed a distribution agreement with MTG Medical Technologies, allowing the company to expand distribution to the markets of Austria, Czech Republic, Germany, Hungary, Slovakia and Switzerland.

Alphatec Spine has expanded into the global market. The company has signed a supply agreement that allows Alphatec Spine exclusive worldwide rights to market and sell an anchored, zero-profiles anterior cervical interbody device.  

TranS1 has reached a distribution agreement with Beijing Jiade Sunshine, allowing the company to expand into the Chinese market with the exception of Hong Kong, Macau and Taiwan.

Iconancy Orthopedic Implants in Warsaw plans to add 50 new jobs by 2015 and invest $2.6 million to lease a new 50,000-square-foot facility.
 
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