According to the American Academy of Orthopaedic Surgeons most recent census data for 2008, 44.3 percent of orthopedic surgeons were practicing in a private practice setting and 20.9 percent were in a solo practice. Only 6.7 percent of orthopedic surgeons were employed by a hospital or medical center and 8.5 percent at academic institutions. Economic and healthcare changes over the next few years are predicted to alter these statistics as more orthopedic surgeons are making the tough decision about where they will practice. "The AAOS study in 2008 shows that as of that time between direct hospital employment and academic medical centers, the number of employed orthopedic surgeons was approximately 15 to 16 percent in 2008," says Scott Becker, JD, CPA a partner at McGuireWoods. "As of 2011, given the uptick in the last few years, we would estimate that it's closer to 20 percent+ today."
Here, orthopedic surgeons and industry professionals discuss how the trend toward hospital employment is affecting orthopedic and spine surgeons, and what factors play a part in making the employment decision.
Matt Ramsey, MD, orthopedic surgeon and vice chair of operations, Rothman Institute, Philadelphia: I spent 11 years as a full time faculty member of the University of Pennsylvania and left the employed model to go into private practice, which is contrary to the current trend. I don't know what percentage you're going to see in full time hospital employment in five years, but I do think that number will rise. There are a couple of things driving this percentage up right now. A culmination of financial pressures in the market over the past two years has driven reimbursement down and we're at a tipping point. Orthopedic surgeons in a small practice (under four to six surgeons) are finding it extremely difficult to financially support a practice.
I think another factor is the uncertainty about what the future is going to bring with healthcare reform. Electronic medical records and other requirements under healthcare legislation are going to be impossible for small groups to handle when they are already under such pressure right now. These physicians go to an employed model instead of a large group practice because they've been in a small group for a while and they don't see advantages to larger groups. They think they won't be able to improve their position.
I see the value of becoming employed by a hospital if you're financially strapped and worried about making a living. You give up you autonomy and the way you practice medicine to some degree when you become employed. It's hard to leave a full time employment model, and the challenge becomes what will happen if it doesn't meet your requirements. The foundation of orthopedics is in the solo practitioners and small group models. There are more small-group surgeons than large group surgeons and more solo than employed, but these numbers are changing very rapidly.
David Ott, MD, orthopedic surgeon, Arizona Orthopaedic Associates in Phoenix: My crystal ball isn't better than anybody else's. I have no idea about what the percentage of orthopedic and spine surgeons employed at hospitals will be, but if I had to give a percentage, I'd say about 30-40 percent of orthopedic surgeons will be employed by a hospital five years from now. Private practice and solo practice for orthopedic surgeons isn't a recommended entity. They need to become part of established organizations, whether it be a large group practice, hospital, health maintenance organization or specialty group. The concept of employed physicians is front and center, and it's been going on for a long time in many states. For example, Kaiser Permanente has been employing physicians for a long time and it has worked well for many of those orthopedic surgeons.
There are always going to be guys that will be bought up by the hospital. There are three groups of people in this category: those who are new and want stability and are looking for a paycheck; older guys who are looking for a more hassle-free environment as fare as business and a little less stress; and the final group that will be employed by hospitals are those surgeons who cannot be successful in the private practice for whatever reason.
The concept of an accountable care organization has pushed orthopedists into looking into employment models. My crystal ball says that in large metropolitan areas, there will be a large number of orthopedic surgeons who will remain in a practice and fee-for-service model. The surgeons will contract with ACOs, hospitals and insurance companies to provide services. It could be a traditional fee-for-service model, bundled model or another type of creative payment model.
R.C. Shah, MD, FACS, general surgeon, Medical/Surgical Director at ARH Summers County Hospital and Medical Director, Beckley (W. Va.) ARH: There will be more surgeons employed by hospitals in the future. Most of those in solo practice will leave because coverage is a problem. Solo practice surgeons must tend to office personnel, provide benefits for their staff, deal with practice billing, purchase supplies and buy their own malpractice insurance, all of which is expensive. The trend right now shows less reimbursement and unless a group is very busy and innovative, it won't match the hospital's salary with the fringe benefits.
The benefits of being employed by the hospital include having a fixed number of hours to work per week. Most surgeons in private practice work several more hours and must be available almost constantly. These surgeons cannot always plan their week and often spend more time away from their families. At the same time, there is a need for orthopedic surgeons in every community, whether urban or rural, and that need is only going to increase.
Robert Snyder, MD, orthopedic surgeon, Orthopaedic & Spine Center in Newport News, Va.: In the past it's been about 80 percent of orthopedic surgeons were in private practice and 20 percent were employed by hospitals. The way things are going, it will probably be reversed and more like 80 percent of orthopedic surgeons will be employed and 20 percent will be in private practice. This percentage will vary regionally. Some of these areas that have very large hospital groups will probably have a higher percentage of orthopedic surgeons in the community employed because it will be harder for independent practitioners to survive, and they will be cut out of referral patterns.
I think down the road you will see a lot more orthopedic surgeons becoming employed, for several reasons. Number one, when you are working for the hospital group, they don't have to invest money upfront and they don't have to worry about the economics of a practice. They won't have to keep up with the business side of the practice, which can include building a new facility, hiring and firing a staff member, employee pension plans and ordering supplies.
Secondly, a lot of people coming out of medical schools and residencies want to have well-defined jobs and be able to know that when they do have time off, it will truly be time off. If they aren't on call, someone else in the group will see patients in an emergency situation. Employed surgeons know they aren't going to make the same salaries as surgeons in private practice, but they are willing to forgo the extra compensation to have clarity and defined working hours. They know they will be making a certain salary and they won't have to pay malpractice premiums because their employer pays that. Surgeons employed at hospitals also have retirement plans. These types of things make it look like hospital employment is advantageous to them.
Stuart Katz, FACHE, CASC, executive director, Tucson (Ariz.) Orthopaedic Surgery Center: I would estimate that 10-15 percent of orthopedic surgeons would be employed by a hospital or health system by 2017, especially if the current payment methodologies of Medicare and Medicaid do not change. I think the younger surgeons — those just finishing residency — are more likely to consider employment than are physicians who are on the "downside" of their careers who have maybe two to four more years of practice and want to "retire in place." I think one of the employment incentives that a hospital or health system could use is loan repayment, which for the younger surgeons could be a crucial factor in their decision-making process. Physicians working for the Public Health Service and in manpower shortage areas have "loan forgiveness" as part of their employment agreements and I think this will be expanded in the future.
Matt Kilton, principal and COO of Eveia Health & Consulting Management: My general perspective is that the orthopedic surgery community will have less interest in being employed than specialists with a greater inpatient focused practice, such as neurosurgeons or trauma specialists. The hospital's true mission of performing inpatient tertiary work doesn't always align with the orthopedic surgeon's practice patterns as an increasing number of surgeries move into the outpatient setting. Exceptions to this would include joint replacements and spine surgery services where many patients still require an inpatient stay. Hand surgeons, sports medicine, arthroscopic surgeons and others who perform the majority of their cases in outpatient settings seem more inclined to remain independent.
Other factors I think will influence the decision include the orthopedic surgeon's access to ancillary revenue, such as an ASC, physical therapy or imaging services. The more diversified in terms of their revenue stream, the less likely it would seem they are to become employed. If surgeons aren't partnered with an ancillary service line, the benefits of becoming employed increase as their professional reimbursements continue to experience downward pressure.
A third influence in this decision is where a surgeon is in the life-span of their career. Are they in the early stages of their career, has their practice achieved a level of maturity or are they in the final phase of their practice? There is an attraction to employment for surgeons entering the sunset of their career, as it mitigates many of the risks associated with private practice. A fairly secure level of income, more predictable call coverage and limited worries and responsibilities with respect to practice operations and management are all benefits of the employment model offered by hospitals. Surgeons that are looking for an exit strategy or a gradual reduction in responsibilities may opt for hospital employment. This isn't necessarily the most lucrative option, but there is more certainty involved and less general oversight required as compared to working independently.
Mike Lipomi, president and CEO, Surgical Management Professionals: I think that the split in the next five years will be in the range of 30-35 percent of orthopedic surgeons will be employed, while the rest will be solo practitioners or in group practices. I think the younger physicians have a bias toward employment rather than starting a solo practice or joining a group. While saying this, there are certainly a lot of new graduates who have completed a combined MD/MBA program and have entrepreneurial interests leading them away from an employment career. While the dynamic of reimbursement reductions, practice restrictions and investment limitations will all move more into the employment area, there will still be a majority of surgeons desiring to control their own destiny and practice parameters. I do think the ability to invest in an ambulatory surgery center and/or have some in-office services will be critical to this decision.
Chuck Peck, MD, CEO, Health Inventures: If we assume that there's not going to be any other option for physicians other than employment by the hospital, then the number might be 60 percent. But I think there are other options for physicians, especially by partnering with management companies where the physicians don't have to sell their practice. Many orthopedic surgeons are so panic stricken by healthcare reform that they think hospital employment is the only option. A lot of high-end physicians are doing that. I think it's clearly reimbursement issues that are driving the decision for hospital employment. Orthopedic surgeons are also afraid of the unknown, because we don't know how healthcare reform is going to play out. Some don't understand the implications of bundling payments, and surgeons and hospitals are going to have to be more aligned so they can figure out how the payment will work. Additionally, don't always have the tools for measuring outcomes for pay-for-performance, which will be important in the future.
The other option for orthopedic surgeons will be to join with other groups and become a larger group practice. If they made themselves larger and contracted or secured professional management, they'll have a greater ability to negotiate reimbursements and have control over their destiny. Right now, many are so panic stricken that they aren't considering other opportunities besides hospital employment.
Ted Schwab, Partner at Oliver Wyman, former CIO at Alegent Health in Omaha. Orthopedists will be the last bastion of independent physicians. Many health and non-academic health systems around the country have tried to employ orthopedic surgeons and failed miserably. They are one of the few specialists that have figured out how to stay independent, increase their income and reduce the cost of care all at the same time.
You may see 10 percent of orthopedic surgeons employed by hospitals in five years, but you'll find 50 percent in hospital joint management programs that are figuring out ways to take 30 percent out of the cost of orthopedic surgery.
Name Witheld, Executive of an ASC Management Company: I'm going to suggest maybe around 15 percent of orthopedic surgeons will be employed by health systems over the next five years, if the current trends hold true. There are exceptions to every rule, but when surgeons are choosing specialties during training, it's the alpha leaders that often self-select into the orthopedic specialty. I, for one (and I may be in the minority), am less pessimistic about rapid employment adoption by orthopedists. They relish their independence in many cases, and they don't feel that the hospital meets their needs or understands their concerns in the current independent arrangement. Why would the hospital better meet their needs, once they are employed? Keep in mind that most orthopedic physician groups including three or more physicians are often still led by an orthopedic surgeon who is 45 years old or older, not by surgeons who finished training in the past five to 10 years, which is where we are seeing a different personality.
I attended a meeting with a larger orthopedic practice where the hospital made an outright plea for employment, for which the orthopedic group respectfully declined during the meeting and disrespectfully mocked after the meeting. There is a healthy distrust between these two parties and the orthopedists do not need the hospital to achieve success, at least not to the same extent as other specialties, such as a general surgeon.
Related Articles on Orthopedic Surgeon Employment:
The Future of Orthopedic Surgeon Employment: 3 Core Concepts
10 Statistics on Orthopedic Surgeon Compensation and Employment in 2010
3 Points on Spine Surgeon Compensation by Employment Status
Here, orthopedic surgeons and industry professionals discuss how the trend toward hospital employment is affecting orthopedic and spine surgeons, and what factors play a part in making the employment decision.
Matt Ramsey, MD, orthopedic surgeon and vice chair of operations, Rothman Institute, Philadelphia: I spent 11 years as a full time faculty member of the University of Pennsylvania and left the employed model to go into private practice, which is contrary to the current trend. I don't know what percentage you're going to see in full time hospital employment in five years, but I do think that number will rise. There are a couple of things driving this percentage up right now. A culmination of financial pressures in the market over the past two years has driven reimbursement down and we're at a tipping point. Orthopedic surgeons in a small practice (under four to six surgeons) are finding it extremely difficult to financially support a practice.
I think another factor is the uncertainty about what the future is going to bring with healthcare reform. Electronic medical records and other requirements under healthcare legislation are going to be impossible for small groups to handle when they are already under such pressure right now. These physicians go to an employed model instead of a large group practice because they've been in a small group for a while and they don't see advantages to larger groups. They think they won't be able to improve their position.
I see the value of becoming employed by a hospital if you're financially strapped and worried about making a living. You give up you autonomy and the way you practice medicine to some degree when you become employed. It's hard to leave a full time employment model, and the challenge becomes what will happen if it doesn't meet your requirements. The foundation of orthopedics is in the solo practitioners and small group models. There are more small-group surgeons than large group surgeons and more solo than employed, but these numbers are changing very rapidly.
David Ott, MD, orthopedic surgeon, Arizona Orthopaedic Associates in Phoenix: My crystal ball isn't better than anybody else's. I have no idea about what the percentage of orthopedic and spine surgeons employed at hospitals will be, but if I had to give a percentage, I'd say about 30-40 percent of orthopedic surgeons will be employed by a hospital five years from now. Private practice and solo practice for orthopedic surgeons isn't a recommended entity. They need to become part of established organizations, whether it be a large group practice, hospital, health maintenance organization or specialty group. The concept of employed physicians is front and center, and it's been going on for a long time in many states. For example, Kaiser Permanente has been employing physicians for a long time and it has worked well for many of those orthopedic surgeons.
There are always going to be guys that will be bought up by the hospital. There are three groups of people in this category: those who are new and want stability and are looking for a paycheck; older guys who are looking for a more hassle-free environment as fare as business and a little less stress; and the final group that will be employed by hospitals are those surgeons who cannot be successful in the private practice for whatever reason.
The concept of an accountable care organization has pushed orthopedists into looking into employment models. My crystal ball says that in large metropolitan areas, there will be a large number of orthopedic surgeons who will remain in a practice and fee-for-service model. The surgeons will contract with ACOs, hospitals and insurance companies to provide services. It could be a traditional fee-for-service model, bundled model or another type of creative payment model.
R.C. Shah, MD, FACS, general surgeon, Medical/Surgical Director at ARH Summers County Hospital and Medical Director, Beckley (W. Va.) ARH: There will be more surgeons employed by hospitals in the future. Most of those in solo practice will leave because coverage is a problem. Solo practice surgeons must tend to office personnel, provide benefits for their staff, deal with practice billing, purchase supplies and buy their own malpractice insurance, all of which is expensive. The trend right now shows less reimbursement and unless a group is very busy and innovative, it won't match the hospital's salary with the fringe benefits.
The benefits of being employed by the hospital include having a fixed number of hours to work per week. Most surgeons in private practice work several more hours and must be available almost constantly. These surgeons cannot always plan their week and often spend more time away from their families. At the same time, there is a need for orthopedic surgeons in every community, whether urban or rural, and that need is only going to increase.
Robert Snyder, MD, orthopedic surgeon, Orthopaedic & Spine Center in Newport News, Va.: In the past it's been about 80 percent of orthopedic surgeons were in private practice and 20 percent were employed by hospitals. The way things are going, it will probably be reversed and more like 80 percent of orthopedic surgeons will be employed and 20 percent will be in private practice. This percentage will vary regionally. Some of these areas that have very large hospital groups will probably have a higher percentage of orthopedic surgeons in the community employed because it will be harder for independent practitioners to survive, and they will be cut out of referral patterns.
I think down the road you will see a lot more orthopedic surgeons becoming employed, for several reasons. Number one, when you are working for the hospital group, they don't have to invest money upfront and they don't have to worry about the economics of a practice. They won't have to keep up with the business side of the practice, which can include building a new facility, hiring and firing a staff member, employee pension plans and ordering supplies.
Secondly, a lot of people coming out of medical schools and residencies want to have well-defined jobs and be able to know that when they do have time off, it will truly be time off. If they aren't on call, someone else in the group will see patients in an emergency situation. Employed surgeons know they aren't going to make the same salaries as surgeons in private practice, but they are willing to forgo the extra compensation to have clarity and defined working hours. They know they will be making a certain salary and they won't have to pay malpractice premiums because their employer pays that. Surgeons employed at hospitals also have retirement plans. These types of things make it look like hospital employment is advantageous to them.
Stuart Katz, FACHE, CASC, executive director, Tucson (Ariz.) Orthopaedic Surgery Center: I would estimate that 10-15 percent of orthopedic surgeons would be employed by a hospital or health system by 2017, especially if the current payment methodologies of Medicare and Medicaid do not change. I think the younger surgeons — those just finishing residency — are more likely to consider employment than are physicians who are on the "downside" of their careers who have maybe two to four more years of practice and want to "retire in place." I think one of the employment incentives that a hospital or health system could use is loan repayment, which for the younger surgeons could be a crucial factor in their decision-making process. Physicians working for the Public Health Service and in manpower shortage areas have "loan forgiveness" as part of their employment agreements and I think this will be expanded in the future.
Matt Kilton, principal and COO of Eveia Health & Consulting Management: My general perspective is that the orthopedic surgery community will have less interest in being employed than specialists with a greater inpatient focused practice, such as neurosurgeons or trauma specialists. The hospital's true mission of performing inpatient tertiary work doesn't always align with the orthopedic surgeon's practice patterns as an increasing number of surgeries move into the outpatient setting. Exceptions to this would include joint replacements and spine surgery services where many patients still require an inpatient stay. Hand surgeons, sports medicine, arthroscopic surgeons and others who perform the majority of their cases in outpatient settings seem more inclined to remain independent.
Other factors I think will influence the decision include the orthopedic surgeon's access to ancillary revenue, such as an ASC, physical therapy or imaging services. The more diversified in terms of their revenue stream, the less likely it would seem they are to become employed. If surgeons aren't partnered with an ancillary service line, the benefits of becoming employed increase as their professional reimbursements continue to experience downward pressure.
A third influence in this decision is where a surgeon is in the life-span of their career. Are they in the early stages of their career, has their practice achieved a level of maturity or are they in the final phase of their practice? There is an attraction to employment for surgeons entering the sunset of their career, as it mitigates many of the risks associated with private practice. A fairly secure level of income, more predictable call coverage and limited worries and responsibilities with respect to practice operations and management are all benefits of the employment model offered by hospitals. Surgeons that are looking for an exit strategy or a gradual reduction in responsibilities may opt for hospital employment. This isn't necessarily the most lucrative option, but there is more certainty involved and less general oversight required as compared to working independently.
Mike Lipomi, president and CEO, Surgical Management Professionals: I think that the split in the next five years will be in the range of 30-35 percent of orthopedic surgeons will be employed, while the rest will be solo practitioners or in group practices. I think the younger physicians have a bias toward employment rather than starting a solo practice or joining a group. While saying this, there are certainly a lot of new graduates who have completed a combined MD/MBA program and have entrepreneurial interests leading them away from an employment career. While the dynamic of reimbursement reductions, practice restrictions and investment limitations will all move more into the employment area, there will still be a majority of surgeons desiring to control their own destiny and practice parameters. I do think the ability to invest in an ambulatory surgery center and/or have some in-office services will be critical to this decision.
Chuck Peck, MD, CEO, Health Inventures: If we assume that there's not going to be any other option for physicians other than employment by the hospital, then the number might be 60 percent. But I think there are other options for physicians, especially by partnering with management companies where the physicians don't have to sell their practice. Many orthopedic surgeons are so panic stricken by healthcare reform that they think hospital employment is the only option. A lot of high-end physicians are doing that. I think it's clearly reimbursement issues that are driving the decision for hospital employment. Orthopedic surgeons are also afraid of the unknown, because we don't know how healthcare reform is going to play out. Some don't understand the implications of bundling payments, and surgeons and hospitals are going to have to be more aligned so they can figure out how the payment will work. Additionally, don't always have the tools for measuring outcomes for pay-for-performance, which will be important in the future.
The other option for orthopedic surgeons will be to join with other groups and become a larger group practice. If they made themselves larger and contracted or secured professional management, they'll have a greater ability to negotiate reimbursements and have control over their destiny. Right now, many are so panic stricken that they aren't considering other opportunities besides hospital employment.
Ted Schwab, Partner at Oliver Wyman, former CIO at Alegent Health in Omaha. Orthopedists will be the last bastion of independent physicians. Many health and non-academic health systems around the country have tried to employ orthopedic surgeons and failed miserably. They are one of the few specialists that have figured out how to stay independent, increase their income and reduce the cost of care all at the same time.
You may see 10 percent of orthopedic surgeons employed by hospitals in five years, but you'll find 50 percent in hospital joint management programs that are figuring out ways to take 30 percent out of the cost of orthopedic surgery.
Name Witheld, Executive of an ASC Management Company: I'm going to suggest maybe around 15 percent of orthopedic surgeons will be employed by health systems over the next five years, if the current trends hold true. There are exceptions to every rule, but when surgeons are choosing specialties during training, it's the alpha leaders that often self-select into the orthopedic specialty. I, for one (and I may be in the minority), am less pessimistic about rapid employment adoption by orthopedists. They relish their independence in many cases, and they don't feel that the hospital meets their needs or understands their concerns in the current independent arrangement. Why would the hospital better meet their needs, once they are employed? Keep in mind that most orthopedic physician groups including three or more physicians are often still led by an orthopedic surgeon who is 45 years old or older, not by surgeons who finished training in the past five to 10 years, which is where we are seeing a different personality.
I attended a meeting with a larger orthopedic practice where the hospital made an outright plea for employment, for which the orthopedic group respectfully declined during the meeting and disrespectfully mocked after the meeting. There is a healthy distrust between these two parties and the orthopedists do not need the hospital to achieve success, at least not to the same extent as other specialties, such as a general surgeon.
Related Articles on Orthopedic Surgeon Employment:
The Future of Orthopedic Surgeon Employment: 3 Core Concepts
10 Statistics on Orthopedic Surgeon Compensation and Employment in 2010
3 Points on Spine Surgeon Compensation by Employment Status