Twenty years after initially proposing the idea of a specialty spine hospital, the physicians of Nebraska Spine Center in Omaha were finally able to open the doors of their very own, physician-owned spine hospital in August of 2010. Despite several setbacks along the way, senior partners led by H. Randal Woodward, MD, remained steadfast in their goal of opening a physician-owned spine hospital.
"We thought about co-management arrangements, but that didn't work out very well," says Dr. Woodward. "The only thing that would work for us would be a hospital partly owned by both our physician group and our hospital partner."
Dr. Woodward and his colleagues were in the early stages of developing Nebraska Spine Hospital when healthcare reform legislation was passed in March of 2010, halting any growth of physician-owned hospitals after Dec. 31, 2010. The physicians of Nebraska Spine Center had mere months to build their hospital, begin accepting patients and achieve Joint Commission certification, but they proceeded with their endeavor.
"We decided the best thing to do was build a hospital within a hospital," says Dr. Woodward. "We purchased a wing from our hospital partner that included patient rooms and ORs. We had a great team of people working on this who were experienced in the medical field. We also partnered with Health Inventures, who had lots of resources to draw from during the process."
It was a race to the finish line, but the surgeons were able to operate on their first patient at Nebraska Spine Hospital in Aug. 2010 and received Joint Commission certification on Dec. 21, 2010, 10 days before the deadline. More than a year later, they are still successfully running the hospital and heading into next year much more knowledgeable about the challenges and opportunities specialty hospitals provide for spine care. Here, Dr. Woodward discusses Nebraska Spine Hospital's first year of operation and the advantages specialty hospitals afford our healthcare system.
The non-medical board members assist with identifying opportunities to increase efficiency and financial transactions. The board also helps negotiate contracts for services and materials.
"We are a separate hospital, but we buy a lot of services from the general hospital, such as the food service," says Dr. Woodward. "However, if we found someone who could provide a better service, we could contract with them."
2. It takes time to develop payor contracts. As anyone who has opened a new hospital knows, Medicare won't begin to reimburse for procedures until you become a Medicare-certified hospital, and you can't become a Medicare-certified hospital until you perform Medicare cases there successfully. Nebraska Spine Hospital did 40 cases before receiving Medicare certification. Once certified, the hospital was able to retrospectively bill Medicare for those procedures. By that point, the hospital also had a few private payor contracts and workers' compensation contracts.
"It took a while for us to get paid because there's a lag time after sending out the bill, and for a period of time we were in good grace from our hospital partner for rent," says Dr. Woodward. "We had hospital debt for a while, but then the reimbursement started coming in. We had problems with our initial billing system, which was a system more accommodating for outpatient surgery centers, but now we are on our way to implementing a billing system I think will work properly. In the meantime, we are filling out our claims by hand on paper. Despite these challenges, we keep plugging away."
3. Succession planning is necessary for long-term survival. As the leaders of Nebraska Spine Center begin to think about retirement, they know bringing new surgeons aboard will be important to sustaining the lifeblood of NSH. "We have to stay abreast of this issue and have some way of attracting other spine surgeons to perform cases at NSH," says Dr. Woodward. "If we make things more attractive to them, they are more likely to come out here. We provide several advantages for spine surgeons, including the spine-focused nurses who can take better care of spine patients."
NSH can also offer interested surgeons an investment and equity position with the hospital. If new surgeons elect to buy in, they must build upon the processes already in place for cost-savings and efficiencies. Dr. Woodward acknowledges that not all surgeons will be able to perform every case there, but encourages surgeons to perform cases there whenever possible.
"Our group is doing around 80 percent of our surgeries at NSH and 20 percent at other hospitals," he says. "There are some surgeons who fear they will lose connections with referral sources employed by other hospitals if they don't perform those cases there. Sometimes patients may also have a preference about where their surgery is performed, but most of the patients would rather go where the surgeon is most comfortable. Our group is most comfortable at NSH because everything runs smoothly and it's easier to schedule cases here."
"Most of the time these complex cases work out fine, but on the unusual occurrence that something doesn't go well, you just have to take the patients down the hall and you have all the medical specialists right there," says Dr. Woodward. "It allows us to perform much more complex procedures and we can still do them more efficiently and cheaper in the specialty hospital setting."
NSH also works with Alegent to cover all of NSH's staffing needs without hiring too many surgeons onto the immediate staff. For example, NSH needs one or two cardiologists available at all times, but most area cardiologists work in larger groups, which would mean contracting with 15 cardiologists at once. Instead, Dr. Woodward and his colleagues devised an agreement with Alegent.
"We have a lot of cross over with the Alegent staff, and some are leased from the hospital," he says. "We lease their time and it's worked out for both parties. It's been a paperwork nightmare, but we are able to meet our staffing needs."
5. Specialty hospitals are more efficient. Unlike general hospitals, where the nurses and staff work with multiple specialties in the OR, specialty hospitals expose the staff to the same procedures every day. "The good thing about a specialty hospital is that it can be more efficient and less expensive and hopefully have better outcomes if you are just doing one thing and doing that one thing well," says Dr. Woodward. "Everyone on our staff knows what to do, and we can perform more complex spine cases with fewer slip-ups. We have the right specialized equipment and personnel focused on spine surgery. Everything we do is faster and safer because everyone is on the same page."
Before opening the NSH, the surgeons from Nebraska Spine Center performed numerous cases at Alegent Health, making the transition to the specialty "hospital within a hospital" smooth. Several members of the medical staff who the surgeons had worked with in the past transitioned down the hallway to NSH.
"Our nurses are familiar with the postoperative process for spine patients and very aware of how spine recovery works," says Dr. Woodward. "We also have three or four different internists that do all the work for us, which is better than having 25 different internists on staff. If there is a problem, it's easier to isolate and fix with fewer people involved."
6. Surgeons are more focused on cost cutting. Many of the surgeons made a financial investment in NSH, which has made cost-cutting measures an immediate focus. The pay more attention to their finances and paperwork required by the government. "Before beginning this project, I didn't realize how much work it is to tow the line with all government regulations," says Dr. Woodward. "You have to make sure your assistant's orders are cosigned and dated at all times or you get points knocked off and the hospital loses money. Now that we have skin in the game, we pay more attention and sign and date our orders. If we don't, the hospital gets in trouble and we get in trouble."
In addition to maximizing payment, the surgeons are more attentive to vendor contracts. "We can carve out our own contracts for implants, which means if one vendor can cut $3 from the price of a suture, we all agree to use them in our cases," says Dr. Woodward. "In addition to capturing more of the reimbursement for our group, cutting costs makes our hospital is more attractive to insurance companies."
If surgeons at NSH can perform a procedure for 20 percent less than other hospitals, insurance companies are more likely to steer their patients there, says Dr. Woodward. "Those things don't happen overnight," he says. "It's challenging because you think you are making headway by cutting costs, but then you wake up to lower reimbursements and you are still just breaking even. Now we are finding out what our hospital administrators have been talking about for 20 years when they talked about cost-effectiveness. As we gain more experience, we will be able to bring down prices even more."
7. Research studies are made easier. Research was always a focus for the Nebraska Spine Center surgeons, but the addition of NSH made their projects easier. In the past, some hospitals were not on board with projects surgeons wanted to take on, or their information gathering system was insufficient.
"Now that we have our own spine hospital, we are able to participate in research projects and share information in a more collaborative fashion," says Dr. Woodward. "We are able to share our information better with online systems so we don't have to physically bring the data from the hospital to our clinic; we just have it in front of us regardless of where we are."
Related Articles on Spine Surgery:
The State of Minimally Invasive Spine Surgery: Q&A With SMISS President Dr. William Taylor
6 Points Comparing Spine Surgeon Compensation
Dr. Stephen Hochschuler: 8 Changes to Ensure a Brighter Future for Spine Surgery
"We thought about co-management arrangements, but that didn't work out very well," says Dr. Woodward. "The only thing that would work for us would be a hospital partly owned by both our physician group and our hospital partner."
Dr. Woodward and his colleagues were in the early stages of developing Nebraska Spine Hospital when healthcare reform legislation was passed in March of 2010, halting any growth of physician-owned hospitals after Dec. 31, 2010. The physicians of Nebraska Spine Center had mere months to build their hospital, begin accepting patients and achieve Joint Commission certification, but they proceeded with their endeavor.
"We decided the best thing to do was build a hospital within a hospital," says Dr. Woodward. "We purchased a wing from our hospital partner that included patient rooms and ORs. We had a great team of people working on this who were experienced in the medical field. We also partnered with Health Inventures, who had lots of resources to draw from during the process."
It was a race to the finish line, but the surgeons were able to operate on their first patient at Nebraska Spine Hospital in Aug. 2010 and received Joint Commission certification on Dec. 21, 2010, 10 days before the deadline. More than a year later, they are still successfully running the hospital and heading into next year much more knowledgeable about the challenges and opportunities specialty hospitals provide for spine care. Here, Dr. Woodward discusses Nebraska Spine Hospital's first year of operation and the advantages specialty hospitals afford our healthcare system.
Lesson learned in the 1st year
1. Administrative governance must be strong. There are few administrators working solely for NSH, but a bulk of the administrators work within several hospitals in the Alegent system. "Since we have some administrators who are familiar with our health system and know how to work through issues that arise, we aren't reinventing the wheel," says Dr. Woodward. "We also have a board made up of hospital administrators and surgeons to make administrative decisions. All our surgeons are excellent clinically, but there are other things we need to do on the management side to make sure we don't sink our ship. The board members help us make those decisions."The non-medical board members assist with identifying opportunities to increase efficiency and financial transactions. The board also helps negotiate contracts for services and materials.
"We are a separate hospital, but we buy a lot of services from the general hospital, such as the food service," says Dr. Woodward. "However, if we found someone who could provide a better service, we could contract with them."
2. It takes time to develop payor contracts. As anyone who has opened a new hospital knows, Medicare won't begin to reimburse for procedures until you become a Medicare-certified hospital, and you can't become a Medicare-certified hospital until you perform Medicare cases there successfully. Nebraska Spine Hospital did 40 cases before receiving Medicare certification. Once certified, the hospital was able to retrospectively bill Medicare for those procedures. By that point, the hospital also had a few private payor contracts and workers' compensation contracts.
"It took a while for us to get paid because there's a lag time after sending out the bill, and for a period of time we were in good grace from our hospital partner for rent," says Dr. Woodward. "We had hospital debt for a while, but then the reimbursement started coming in. We had problems with our initial billing system, which was a system more accommodating for outpatient surgery centers, but now we are on our way to implementing a billing system I think will work properly. In the meantime, we are filling out our claims by hand on paper. Despite these challenges, we keep plugging away."
3. Succession planning is necessary for long-term survival. As the leaders of Nebraska Spine Center begin to think about retirement, they know bringing new surgeons aboard will be important to sustaining the lifeblood of NSH. "We have to stay abreast of this issue and have some way of attracting other spine surgeons to perform cases at NSH," says Dr. Woodward. "If we make things more attractive to them, they are more likely to come out here. We provide several advantages for spine surgeons, including the spine-focused nurses who can take better care of spine patients."
NSH can also offer interested surgeons an investment and equity position with the hospital. If new surgeons elect to buy in, they must build upon the processes already in place for cost-savings and efficiencies. Dr. Woodward acknowledges that not all surgeons will be able to perform every case there, but encourages surgeons to perform cases there whenever possible.
"Our group is doing around 80 percent of our surgeries at NSH and 20 percent at other hospitals," he says. "There are some surgeons who fear they will lose connections with referral sources employed by other hospitals if they don't perform those cases there. Sometimes patients may also have a preference about where their surgery is performed, but most of the patients would rather go where the surgeon is most comfortable. Our group is most comfortable at NSH because everything runs smoothly and it's easier to schedule cases here."
Advantages of specialty hospitals
4. Hospital-in-hospital design allows for more complex cases. Nebraska Spine Center surgeons worked with their hospital partner, Alegent Health, to develop NSH's hospital-in-hospital design, which allows surgeons to perform more complex cases than free-standing specialty hospitals. Free-standing hospitals are less likely to have surgeons performing scoliosis cases and other complex procedures because in the event of complications, the hospital wouldn't have the specialists to support emergency care. With the specialty hospital within a general hospital, surgeons can perform complex cases and treat patients with high comorbidities because other specialists are right around the corner."Most of the time these complex cases work out fine, but on the unusual occurrence that something doesn't go well, you just have to take the patients down the hall and you have all the medical specialists right there," says Dr. Woodward. "It allows us to perform much more complex procedures and we can still do them more efficiently and cheaper in the specialty hospital setting."
NSH also works with Alegent to cover all of NSH's staffing needs without hiring too many surgeons onto the immediate staff. For example, NSH needs one or two cardiologists available at all times, but most area cardiologists work in larger groups, which would mean contracting with 15 cardiologists at once. Instead, Dr. Woodward and his colleagues devised an agreement with Alegent.
"We have a lot of cross over with the Alegent staff, and some are leased from the hospital," he says. "We lease their time and it's worked out for both parties. It's been a paperwork nightmare, but we are able to meet our staffing needs."
5. Specialty hospitals are more efficient. Unlike general hospitals, where the nurses and staff work with multiple specialties in the OR, specialty hospitals expose the staff to the same procedures every day. "The good thing about a specialty hospital is that it can be more efficient and less expensive and hopefully have better outcomes if you are just doing one thing and doing that one thing well," says Dr. Woodward. "Everyone on our staff knows what to do, and we can perform more complex spine cases with fewer slip-ups. We have the right specialized equipment and personnel focused on spine surgery. Everything we do is faster and safer because everyone is on the same page."
Before opening the NSH, the surgeons from Nebraska Spine Center performed numerous cases at Alegent Health, making the transition to the specialty "hospital within a hospital" smooth. Several members of the medical staff who the surgeons had worked with in the past transitioned down the hallway to NSH.
"Our nurses are familiar with the postoperative process for spine patients and very aware of how spine recovery works," says Dr. Woodward. "We also have three or four different internists that do all the work for us, which is better than having 25 different internists on staff. If there is a problem, it's easier to isolate and fix with fewer people involved."
6. Surgeons are more focused on cost cutting. Many of the surgeons made a financial investment in NSH, which has made cost-cutting measures an immediate focus. The pay more attention to their finances and paperwork required by the government. "Before beginning this project, I didn't realize how much work it is to tow the line with all government regulations," says Dr. Woodward. "You have to make sure your assistant's orders are cosigned and dated at all times or you get points knocked off and the hospital loses money. Now that we have skin in the game, we pay more attention and sign and date our orders. If we don't, the hospital gets in trouble and we get in trouble."
In addition to maximizing payment, the surgeons are more attentive to vendor contracts. "We can carve out our own contracts for implants, which means if one vendor can cut $3 from the price of a suture, we all agree to use them in our cases," says Dr. Woodward. "In addition to capturing more of the reimbursement for our group, cutting costs makes our hospital is more attractive to insurance companies."
If surgeons at NSH can perform a procedure for 20 percent less than other hospitals, insurance companies are more likely to steer their patients there, says Dr. Woodward. "Those things don't happen overnight," he says. "It's challenging because you think you are making headway by cutting costs, but then you wake up to lower reimbursements and you are still just breaking even. Now we are finding out what our hospital administrators have been talking about for 20 years when they talked about cost-effectiveness. As we gain more experience, we will be able to bring down prices even more."
7. Research studies are made easier. Research was always a focus for the Nebraska Spine Center surgeons, but the addition of NSH made their projects easier. In the past, some hospitals were not on board with projects surgeons wanted to take on, or their information gathering system was insufficient.
"Now that we have our own spine hospital, we are able to participate in research projects and share information in a more collaborative fashion," says Dr. Woodward. "We are able to share our information better with online systems so we don't have to physically bring the data from the hospital to our clinic; we just have it in front of us regardless of where we are."
Related Articles on Spine Surgery:
The State of Minimally Invasive Spine Surgery: Q&A With SMISS President Dr. William Taylor
6 Points Comparing Spine Surgeon Compensation
Dr. Stephen Hochschuler: 8 Changes to Ensure a Brighter Future for Spine Surgery