Creating a Destination Center for Superior Performance

Marshall K. Steele, MD , November 19, 2009

Editor's note: The following article is adapted from HealthLeaders Media's new book, Orthopedics and Spine: Strategies for Superior Service Line Performance. For more information, visit

The number of patients needing healthcare, especially orthopedic services, is growing quickly; however, the number of orthopedic surgeons to care for them is not keeping pace. Orthopedic coverage in EDs is at risk in many hospitals. Each day, more and more hospitals are paying doctors to be on call. With margins below the 2.5% level for many hospitals, this becomes an additional burden.

Despite a wealth of uncertainty, several things are for sure. Hospitals and surgeons will be asked to do more with less. Costs must be reduced while quality improves. Transparency will become mandatory. There will be winners and losers.

Those who accept the status quo and cling to the broken system of the past will not be the winners. The community hospital and its physicians must create a product and brand equal to or better than that of its larger competitors. It won't be enough for them just to think or say they are excellent; they will be asked to demonstrate their results. All the government can do is provide us with the right incentives. It cannot transform healthcare. That can be done only by those of us in the trenches.

Outlook for surgeons
Surgeons will at least be able to count on having plenty of patients. For joint surgeons, the loss of reimbursement has been significant. In 1978, a total joint replacement reimbursement was $5,000. In 1994, it was reduced to $2,100, and by 2007 to $1,280. Whether surgeons will be fairly compensated and can increase their efficiency to handle more patients is unclear.

Given the economic pressures the country is facing, surgeon reimbursement is likely to decrease in real dollars rather than rise. Affected by this decline in reimbursement, surgeons will continue to find other avenues of income, such as surgical hospitals, ambulatory surgery centers, MRI, physical therapy, orthotics, and prosthetics. Providing these profitable services once provided by the hospital has created more stress on the hospital margins. Hospitals have asked the government to curb this activity. Just when we need closer physician-hospital relations to solve our issues, we have increased tension.

Patients will continue to expect perfection from surgery. They feel that if we could put a man on the moon, we should certainly be able to provide nearly perfect healthcare. Physicians are held to a very high standard to do just that, and if they do not, they often find themselves in court. It is also unlikely that Congress will enact any significant tort reform, meaning that very costly defensive medicine and high malpractice premiums will continue.

With all this turmoil, many excellent orthopedic surgeons and large groups are now opting to become employed by hospitals. Compensation is usually based on relative value units worked. Employed surgeons still have significant governance in day-to-day practice decisions. I have observed this working quite well in many places. Goals can be more easily aligned. The orthopedic practice that I founded in 1977 has chosen this route. With the expected shortage of surgeons and national policy changes, this may be the best option for both parties. Whether employment becomes a success story for all involved will not be known for several years.

The traditional model
One of the major flaws with traditional medicine is that we don't have a comprehensive system of coordinated patient-centric care. We have an "it depends" medicine. With specialization (a good thing) has come fragmentation. Everyone operates within silos. Primary care doctors have their systems and set of beliefs, as do surgeons, anesthesiologists, professional staff members, and so on. From their viewpoint, the care they are giving is excellent. However, this individualism, which to date is sacrosanct in healthcare, leads to multiple plans of care for the same condition.

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