Here are eight best practices for increasing spine practice revenue next year.
1. Create checks and balances for financial issues. The practice's finances must be handled with care and should include checks and balances to make sure all the numbers come out right. Dennis Crandall, MD, founder and medical director of Sonoran Spine Center in Mesa, Ariz., has implemented "safety" or "accountability" protocols in how the office staff handles cash, billing and posting.
"Make sure all of the money issues have redundancy in their processes so that you are comfortable the system is going to work," says Dr. Crandall. "Employees should have a sense that they can't be dishonest and not have it noticed. It will be noticed."
You can create a management team to oversee these issues or design the processes so everyone is accountable for their actions.
2. Strike a balanced payor mix. With declining reimbursement rates across the board, spine practices must analyze their payor mix and figure out how to recruit more profitable cases. For Sonoran Spine Center, this means doing an appropriate number of other cases, including workers' compensation cases, to balance Medicare rates. Workers' compensation cases pay higher rates than other cases, partially because there is extra work the physicians and specialists must complete for each episode of care. Some practices focus solely on workers' compensation cases — which is one example of an effective business model, but not one Sonoran Spine Center aspires to achieve.
"We don't want to do entirely workers' compensation cases, but we do want a good level of workers' compensation in our payor mix," says Dr. Crandall. "With that higher reimbursement, we can become more efficient."
However, if Medicare cases continue to decline at an unsustainable rate, spine practices may need to drop those cases in the future to stay profitable. "We haven't closed the door on Medicare patients yet because we feel it's important to care for this population," says Dr. Crandall. "However, we can't follow Medicare if rates keep declining. Many of our colleagues have already decided they can't see Medicare patients."
3. Aggressively negotiate with insurance companies. When going through negotiations with payors, make sure to hold your ground on your prices.
"The worse thing surgeons can do is undercut others by lowering their prices," says Khawar Siddique, MD, a fellowship-trained spine surgeon with Beverly Hills Spine Surgery in California. "For example, if surgeon X goes to United and charges half as much as surgeon Y, they'll cut the rates for surgeon Y as well. Surgeons must be aggressive and not undercut each other. If you negotiate a bad contract, you have to work twice as hard for your income and the quality of your work will drop."
By going out-of-network, Dr. Siddique says surgeons can signal their outcomes have higher quality than others and demand a fair price. "You can't gouge patients or payors for the procedure, but you don't want to undercut others and lower prices either," he says. "If you are a surgeon from a small town without much competition, you must demand more from commercial payors because you have a position of leverage."
Spine surgeons can also become part of a group to leverage better negotiations with insurance companies. However, you must be part of a group in order to collectively bargain. "Surgeons are prohibited from joining unions, so if you are not part of a group you can't collude with other surgeons about the price for procedures," says Dr. Siddique. "However, if you are in a group all under the same tax ID, you can negotiate for better deals with insurance companies."
4. Partner with insurance companies to keep rates competitive. Insurance companies are now looking to make the healthcare market more competitive in terms of pricing, and in some communities large physician groups are able to partner with them to keep costs low. "In states where there are favorable payors and workers compensation, partnering with payors instead of hospitals will help surgeons avoid employment," says William Stevens, MD, founder of the Center for Spinal Disorders and OSNA member in Phoenix. "Take advantage of the fact that payors are leery of hospitals being in the position to call all the shots."
For example, in Utah costs are high because hospitals have employed nearly all surgeons in the state. Since hospitals employ all the surgeons, they can demand a higher rate from payors than otherwise possible.
"When insurers look at their costs in places like Utah, they aren't happy with hospitals and large systems controlling everything in the market," says Dr. Stevens. "You can partner with insurance companies on contracts for reimbursement and providing care if they are concerned about hospitals having too much control. You can also work with them on an accountable care organization or bundled payments where the payment goes through the physician first."
Large orthopedic groups around the country are now exploring this option with payors, and it could become more common among spine surgeons as well. "With a large group of surgeons, such as OSNA, you are in a position to take advantage of these partnerships," says Dr. Stevens. "We are in the early phases of exploring these kinds of partnerships, but insurers are excited because they think we can do a good job of keeping the price down."
5. Bring on new specialists to cover the spectrum of spine care. Spine practices will boost their revenue by keeping specialists and services in-house. "It makes economic sense to keep everything under one roof," says Hal Blatman, MD, founder of The Blatman Pain Clinic in Cincinnati.
Besides bringing in additional patients and keeping referrals in-house, partnering with a pain management physician can increase revenue because surgeons can spend more time in the operating room with surgical patients while pain management physicians treat the pain patients. "The practice becomes more lucrative because the surgeon makes more money doing surgery, so they should spend time doing that," says Dr. Blatman. "The pain physicians have their own expertise and can deal with patients who don't need surgery."
Bringing on pain management physicians and other back pain specialists can increase patient flow to the practice. At The Southeastern Spine Institute, physicians do more than 1,000 injections and rhzotomies per month. Overall, the pain management physicians have performed spinal cord stimulator implantations for 7,000 patients since joining the practice. The increased patient flow means additional revenue, and if the patients reach a point where non-operative care isn't effective, they will use your surgical services as well.
"It's convenient because we are in the same building, so the surgeons will send patients to the pain management physicians, but it's also not unusual for pain management physicians to send us their patients who have developed more complex problems, such as disc degeneration," says Don Johnson, MD, medical director at Southeastern Spine Institute. "When their patients have a new trauma, I get a call from the pain management physician saying they have a patient they need the surgeon to see right away. We can deal with those patients here as well, so it's not a one-way referral street."
6. Invest in an outpatient surgery center. Even with the economic downturn, Robert S. Bray, MD, a neurological spine surgeon based in Marina del Rey, Calif., and founder of DISC Sports and Spine Center, says a new multidisciplinary outpatient surgery center focused on orthopedics and spine care has be a booming business. Between the old and new surgery centers, DISC surgeons have performed more than 4,500 cases in the outpatient ASCs and never reported an infection. "Our surgery centers are built to really high standards and run very well," says Dr. Bray. "We are seeing high acuity, low volume cases becoming the mainstay for sports medicine surgery centers in the future. The center has to be built at a high level for these very complex cases and incorporated into the practice's overall business model."
DISC surgeons have been able to successfully perform knee and hip replacements, anterior lumbar interbody fusions, lateral lumbar interbody fusions and other spine procedure using pedicle screws. "We aren't just doing the little things; we are doing bigger surgical cases in the outpatient environment and seeing good outcomes," says Dr. Bray.
7. Expand into new markets strategically. Opening new office locations can provide a great opportunity to serve patients in a new market and create more revenue for your practice. However, you have to make sure the new market location can support your office. Practices can test the waters by meeting with hospital administrators and potentially forming a partnership, such as a co-management arrangement.
"Nowadays, you are seeing a growing trend of physicians becoming employed by hospitals," says Alexander Vaccaro, MD, PhD, a spine surgeon and one of the founding partners of Rothman Institute. "That hasn't happened with our group. When we are looking to expand to a new location, we look at the area of orthopedic care and ask what would work well with the hospital. If the area is well served, we don't have an opportunity. If the area needs more orthopedic service, we go to the hospital and see how we can work with them."
8. Invest in new marketing initiatives. If you're serious about your practice's success, you have to dedicate yourself to the marketing efforts. This doesn't mean you have to spend a fortune on marketing and spend time reviewing everything that comes your way; learn to delegate and trust others with marketing your practice.
"If you are doing this alone, you will never get a break," says Steven Siwek, Jr., founder of Medical Marketing Solutions. "You have to know when to delegate. Our company has come to the rescue of some other companies and practices because they were overwhelmed by the business operations. It's important to know how to delegate items to experienced professionals."
Physicians are analytical and often spend a great deal of time making decisions — even to decide which colors should represent the practice. Create a timeline for these decisions and stick to the deadlines.
"As physicians, your marketing budget should be something you look forward to creating," says Mr. Siwek. "It is the key to growth and new strategies for revenues."
Whether it's print or online marketing, and whether you hire someone in-house or outsource your marketing, surgeons must trust the marketing team and focus on providing good patient care. Ultimately, your marketing plan should be consistent and focus on developing a positive first impression to new patients.
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