Orthopedic group blazes trail as hip, knee replacements move out of hospitals
Michigan Orthopaedic Surgeons, a newly formed 44-surgeon group based in Southfield, Mich., is aggressively moving to prove outpatient orthopedic surgery can be just as effective as traditional inpatient surgery for much lower costs.
Formed in early 2017 by five smaller independent orthopedic specialty groups that primarily practice at Beaumont Hospital in Royal Oak and Troy, the single-specialty private academic medical group with 260 employees has nearly quadrupled the number of outpatient surgeries like hip and knee replacements it has done over the past year. Revenue also has grown 17% this year to $55 million from $47 million in 2017.
As technology and support services for outpatient surgeries have improved, MOS has increased the number outpatient surgeries from 700 in 2017 to an estimated 2,700 this year, numbers that are expected to grow even more as more surgeries move into lower-cost outpatient settings, said Dennis Viellieu, CEO of Michigan Orthopaedic Surgeons.
Dr. Paul Fortin, president of Michigan Orthopaedic Surgeons and a foot and ankle specialist, said Michigan payers, insurers and hospitals are behind in the movement to outpatient surgery, and MOS is trying to prepare for an explosion he believes will occur in Southeast Michigan in the coming years.
"Michigan is behind the eight ball in the movement to outpatient surgery. We will do more in the future because payers and employers are starting to adapt to change," Fortin said. "The costs are lower, and we are proving the outcomes are good. We aren't there yet, but we are building our database to prove it."
Last month, MOS fully converted all five office sites to a single electronic health record system — Athena Health EHR. The Athena EHR will help it track costs and outcomes and integrate care more seamlessly for patients, he said.
"We want to build on the potential of evidence-based medicine and provide care that will be easy for our patients. Healthcare is now done in a fragmented manner, and we can do better," Fortin said.
There was another reason for the physicians banding together, Fortin said. Independent doctors sense smaller practices "are dying. Lots of young doctors are employed by big institutions," he said. "We hope by coming together, having some size, we will be able to save smaller practices" from takeover or domination by hospitals or larger corporations.
Dr. David Markel, market president of The Core Institute at Porretta, a nine-physician orthopedic group in Southfield and Novi that mainly practices at Ascension hospitals, said the MOS merger was a great move and reflects the need for medical groups to gain operational and managed care contracting efficiencies.
"We talked with some of the (MOS) groups about doing something similar. They weren't ready, but it must have gotten the domino going" that led to the five-group merger, said Markel, former president of the Michigan Orthopedic Society.
Outpatient centers key to lowering costs
One of the keys to MOS' growth is the push of payers and employers to do more surgeries in outpatient settings, Fortin said.
MOS does the majority of its outpatient surgeries at UnaSource Surgery Center in Troy, where it has a 40% ownership interest in the five-operating room center. UnaSource is a joint venture with Crittenton Hospital, physicians and managing partner Visionary Enterprises, a for-profit company in Indianapolis.
So far, the group has conducted more than 700 outpatient surgeries this year at UnaSource that would otherwise have been performed at Beaumont in Royal Oak, Fortin said.
"We have a good relationship with Beaumont, but we are an independent group and the surgery center" creates friction with them, Fortin said. "Many of our (surgeons) have developed significant outpatient-based businesses. We wanted to do more as a (single) entity."
Carolyn Wilson, R.N., Beaumont's COO, said Beaumont has experienced a small percentage decline in inpatient surgeries in Royal Oak the past year, as MOS is its primary orthopedic group. Beaumont in Royal Oak is projected to perform 7,000 inpatient orthopedic surgeries this year.
"They (MOS) provide the vast majority of care at the Royal Oak campus. They take trauma calls and do inpatient work," said Wilson, adding that group members oversee Beaumont's orthopedic residency and fellowship program. "We are connected with them in many ways."
Beaumont supports the transition of inpatient surgeries to outpatient and same-day surgery centers because patients and employers are demanding it, Wilson said. "We spend the most as a country in health care, and the move to lower-cost platforms is right for the patient," she said.
Wilson, who has worked in Minneapolis for Fairview Health Services before coming to Beaumont in 2016, said other parts of the country are ahead of Michigan in outpatient surgery trends.
Viellieu said Michigan payers for years didn't encourage lower-cost outpatient surgery because costs were simply passed on to employers or patients.
"There was not a strong need to change because reimbursement was good in Michigan. But as the pressures hit, (payers such as Blue Cross Blue Shield of Michigan) started to push outpatient surgery," Viellieu said. "There still needs to be a cultural change with payers" toward more flexibility for outpatient surgeries.
Beaumont developing outpatient strategy
In November, Beaumont announced plans to build a $5.5 million outpatient orthopedic surgery center in Taylor. Some MOS surgeons will help staff the center. Beaumont also is working with an Atlanta company to build a 30-urgent care center network.
Wilson said the Taylor center, along with a planned new orthopedic surgery and musculoskeletal center on the Royal Oak hospital campus, are part of a Beaumont strategy to move more into outpatient orthopedics.
"We want to serve our patients in a couple of communities, if they need elective hip and knee," she said. "Taylor and Royal Oak makes sense. ... Separating inpatient and outpatient makes sense." The two ambulatory surgery centers will also include Beaumont orthopedic residents and fellows.
Wilson said Beaumont is discussing a partnership with MOS on the Royal Oak project. She said it is too soon to talk about the project details. Fortin said the joint venture, if approved, will benefit both organizations and patients and further solidify the move to outpatient surgery.
Steve Anderson, Blue Cross' vice president for hospital contracting and network administration, said the dynamics in Michigan are different for outpatient surgery than other parts of the country. He said Michigan has had fewer ambulatory surgery facilities, and payers have been able to work very closely with hospitals in the past to improve quality and contain costs.
"Historically, Michigan has tried to cooperate and collaborate with hospitals to prevent a watering-down of revenue to freestanding facilities," said Anderson.
Now, Blue Cross is moving more to encourage use of lower-cost outpatient infusion centers, imaging centers and ambulatory surgery. "We are able to do it now with the infrastructure we have in the state," he said. "Employers are really clamoring for cost containment."
Blue Cross hip and knee bundled payment program
MOS is one of two physician organizations in Southeast Michigan, along with Troy-based Triarq Health, that are participating in a prepaid, or bundled, hip and knee replacement program offered by Blue Cross Blue Shield of Michigan. The Blues' program, and a similar one sponsored by Priority Health, is designed to lower costs by encouraging outpatient surgeries.
Under the Blue Cross program, providers in Southeast Michigan are paid a single fee of $28,700 for a non-Medicare, uncomplicated knee or hip replacement surgery and will be responsible for 90 days after the surgery and for all covered treatment, including physical therapy, rehabilitation, home health or nursing home care.
From April through October, MOS has performed 200 outpatient surgeries under the Blue Cross bundled payment program, Viellieu said. While quality and outcomes have been good, he said, it is unclear if the group has made money under the program. "We are hopeful for this year and bullish for next year. We have learned a great deal," he said.
Blue Cross is crunching the first six months of data and doesn't yet have any results on the bundled program, but Anderson said he believes the hip and knee bundled-payment program is producing good results.
"It took a little longer for the organizations (four hospitals and 65 surgeons) to identify patients and develop the bundled program protocol," Anderson said. "It takes a lot of work for both the physician and hospitals. ... They have done some lean work streamlining processes and some episode development to drive down care variations, which is the other side of the coin besides costs."
In 2019, Blue Cross plans to add at least two more surgical and non-surgical bundled-payment programs. "We are excited to be excited working with (doctors and hospitals) on outpatient care" projects, Anderson said.
While Beaumont isn't participating in the Blue Cross hip and knee bundle, Wilson said developing more outpatient surgery access will allow Beaumont to join the program. "We would very much like to join in the bundle. Medicare has a bundle. The Twin Cities has lot of direct employer bundles. We are on a journey to standardize hip and knees," she said.
Markel said Ascension hospitals in Michigan also are developing an outpatient orthopedic strategy and are talking with Core and other orthopedic groups about participating. "They are talking with everyone. It will be a statewide service line," he said.
Dr. David Collon, past president of MOS and an orthopedic surgeon specializing in sports medicine who was a team physician of the Detroit Tigers from 1984-2005, said the merger of the five groups was attempted several years ago, but the timing wasn't right. "We decided where it worked right you have to come together gradually, two to five years."
Collon said the movement of payers like Blue Cross and Medicare to financially incentivize outpatient surgeries gave the groups momentum.
"This is the best group of orthopedic surgeons I've ever seen," said Collon, who was chair of the orthopedic department at Henry Ford Hospital from 1996 to 2004. "We put together a group of quality people to improve research and education, push clinical care to new levels, and we hope to get cost savings by coming together."
The five groups that compose MOS are Oakland Orthopedic Surgeons in Royal Oak, Troy Orthopedic Associates, Beverly Hills Orthopaedic Surgeons, Michigan Orthopaedic Institute with offices in Southfield and West Bloomfield Township, and Performance Orthopedics in Bingham Farms and Troy. Oakland Orthopedic also operates a physical therapy clinic in West Bloomfield. Specialists include spine, foot and ankle, hand and extremity, sports medicine, pediatric, major trauma and reconstructive hip and knee replacement.
MOS plans to grow, but Fortin said it doesn't plan to grow just to get big. "We want to broaden our footprint. We are primarily an Oakland County group. We want to expand to the whole of Southeast Michigan" through affiliations or other partnerships, he said. He said the group is actively seeking additional rehabilitation and pain-management specialists.
"I have guys who are leaders in their fields, who are internationally known. (We refer patients to each other) for hip, knee or spine," he said. "It is a natural part of our practice now. ... It provides more cost-effective care."
Over time, Fortin hopes to develop outcomes data that can show large employers and health insurers that MOS patients do better than other groups and hospitals. "We are not there yet, but we are tracking quality measures and outcomes. There always will be patient choices, but the new evidence will be data driven."
Besides back-office savings like billing and collections improvements, other merger benefits expected include further developing other profitable services, including imaging, physical therapy, durable medical equipment and orthopedic urgent care services. MOS already is saving the group on medical malpractice premiums.
Research and medical education
As a private academic orthopedic practice, Fortin said MOS members are also clinical faculty at the Oakland University William Beaumont School of Medicine. The group trains about 40 residents and fellows in MOS' seven clinic locations on a weekly basis, Viellieu said.
While being an academic practice doesn't generate additional revenue, Fortin said it fulfills the group's mission, which is to contribute to science and medical education. "Half of the group is engaged in research projects, working with Beaumont" and its orthopedic laboratory on "basic science and also clinical practice."
MOS doctors have more than 140 approved or pending clinical studies patients and another 45 basic science lab studies on cells, animal and biomechanic projects, Viellieu said.
"We are doing more research projects now because we are connected," Fortin said.
"Orthopedic group blazes trail as hip, knee replacements move out of hospitals" originally appeared in Crain's Detroit Business.
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