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What You Need to Know About Surgeons and Hospitals Increasing Alignment

Surveying the hospital landscape, I am struck by a shift in physician attitudes about partnering with their affiliated hospitals. The hospital/physician relationship, historically fraught with mistrust and skepticism, is being supplanted by greater transparency and true collaboration. The newfound collaboration seems to be driven by 1) intentional and strategic sharing of data on orthopedic and spine program performance, and 2) increased awareness of the co-dependency of hospital and physician to survive and thrive in a challenging environment. 

This column focuses on major trends reshaping the device company and provider relationship. Each of these trends represents an opportunity for orthopedic companies. The opportunity is threefold: re-strategize selling to an expanded model of provider purchasing, align with rather than skirt hospital/physician collaboration and pursue a greater understanding of the integration with provider care pathways across the orthopedic continuum.

Historically, for companies selling into hospitals and health systems, two themes have been consistent:

  1. Provider customers (hospital, health systems and physician practices) have dramatically changed the way they buy, in terms of who makes decisions and decision-making processes.
  2. Vendor (device company) value-add initiatives meant to support product sales have arisen, and to some degree, receded.

More recently, two additional themes have emerged:

  1. An invigorated appreciation of hospital/physician collaboration on matters of cost, quality and growth.
  2. An inexorable migration of orthopedic and spine cases to ambulatory settings.

One illustration of collaboration was articulated by a Chief of Orthopedics in the northeast. He shared that his large private practice recently executed a Professional Services Agreement (PSA) with their primary hospitals. In this case, the hospital assumes the management of the practice with physicians paid on a productivity basis. One effect of a PSA is to relieve physicians of the administrative burden of running a practice and focus on clinical issues while retaining ownership. A PSA is one model of alignment among several, both formal and informal. Additional examples include:

  • Dialogue & Transparency
  • Strategic Governance Development
  • Medical Directorships
  • Program Reinvestment: O.R., labs, acute care space, equipment, staff continuing education/training, research
  • Management Services Agreement
  • Gainsharing/Value Sharing
  • Co-management Agreements

Device Company Risk and Opportunity


This newfound cooperation has significant implications, and potential risks, for companies relative to physician preference item pricing (PPI) and realignment of long-standing physician/vendor brand loyalty. Among hospital leadership, device companies have been at times viewed as outsiders to hospital/physician collaboration, and in some cases as antagonists. In this new paradigm, orthopedic companies must begin to partner with both hospital and surgeon on issues of innovation, product quality, service line development and price. The following list illustrates a traditional surgical care continuum. The stages marked with V suggest a vendor opportunity to integrate products, services and support for providers. 

      • Diagnosis
      • Day of Surgery: Technology, Case Coverage V
      • Surgical Scheduling, Planning & Device Selection V
      • Post-Operative, Rehabilitation
      • Pre-Operative Clearances
      • Outcomes: Operational, Financial, Clinical and Functional V
      • Hospital/ASC Readiness: Site-specific requirements and protocols V
      • Sustained Patient Engagement through Recovery V

Surgeon, Administrator, Service Line Executive Lend Expert Voices


Each quarter I reach out to colleagues and solicit their ground-level insights. For a greater understanding of risks and available opportunities, I sought out the following three perspectives.

Diversify Surgery Settings, Standardize Patient Care

According to Asit Shah, M.D., Ph.D., Fellowship Trained Orthopedic Surgeon, physician partnership with the hospital is absolutely essential to guarantee the alignment of goals and processes. Effectively performing approximately 500 joint replacements annually at Englewood requires sharing mutual burdens and responsibilities from both the hospital and surgeons.

Dr. Shah’s comments touch on many key trends.

  • Concentrate on three sites of service: inpatient hospital, hospital same day/outpatient and ambulatory surgery center (ASC). Each has their distinct processes and protocols. As more cases migrate to outpatient, for the ASC in particular, there must be highly defined clinical and process steps, executed with consistency and efficiency.
     
  • Replicate results: quality, functional outcomes, decreased readmission, decreased infection rates, consistently high patient satisfaction and improved management of risks.

  • Standardize on a defined timeline. This is a foundational practice to accurately identify and mitigate risk: preadmission testing, preoperative optimization, patient clearance, e.g. diabetic screening, cardiac clearance, bariatric screening and O.R. readiness.
     
  • Increase coordination (planning, availability of instruments, etc.) among hospital, surgeon and vendor. It’s required to effectively and efficiently perform surgery and appropriately manage costs. If a physician’s costs are prohibitive, alignment is much more challenging. Englewood does not limit vendor systems, but may require a rationale for physicians’ use of multiple systems, sometimes resulting in a change of practice to appropriately align with clinical and programmatic goals.
     
  • Find efficient products. Dr. Shah cited an innovative product approach to ASC-based total knee replacement; a single instrument tray customized for surgeon preference and a single tote of implants for each patient. With its emphasis on increased efficiency, decreased cost and improved throughput, this model aligns with the emerging trend of ambulatory orthopedics.
     
  • Encourage orthopedic companies to support, innovate and complement hospital goals on quality, price, service and improved outcomes.

Dr. Shah shared these final remarks. “Joint surgeons want to work with hospitals and are seeking partnership. Joints are still a big surgery, and hospitals ensure surgeons have adequate surgical and medical assets and systems, structure and resources. Spine surgeons are also looking to hospitals as partners, working with a shared vision of service.”

Know Your Numbers, Build Relationship Capital

Allen Marsh, MBA, MHA, FACHE, is Chief Operating Officer at Medical City Lewisville, Texas. Prior to his current role, Mr. Marsh served as Vice President of Neuroscience, Orthopedics and Spine for HCA’s Continental Division. He was responsible for the growth and program development among eight hospitals, 19 surgery centers and more than 200 employed physicians and 12,000 employees. His depth and breadth of orthopedic and administrative leadership uniquely informs his commentary.

Mr. Marsh offers three key messages that impact orthopedic services:

  • Know your numbers. Collect, report and lead with performance metrics: operational, satisfaction, financial, clinical. The hospital tracks traditional measures, including surgical site infection, transfusion, readmission and others. For example, hip fracture metrics have emerged as important measures along with compliance to protocols and best practice processes. The organization strives to report data as close to real time as possible to assure rapid response and intervention if needed.
     
  • Build and sustain “relationship capital” with medical staff. With a staff of over 600 physicians, challenges are certain to arise. A solid base of communication serves as a foundation for collaboration and the ability to get along. Mr. Marsh intentionally reaches out to medical staff to build and sustain effective partnerships, spending time with surgeons in the O.R. and regularly sharing meals with them. 
     
  • Target, elevate and maximize physician and patient satisfaction. Understanding and tracking the elements that drive satisfaction scores is critical to all facets of delivering healthcare. For Mr. Marsh and MCL, satisfaction measures are routinely collected and reported along with one-off situations that require intervention and a defined plan of response. He states that satisfaction starts with the CEO and is reflected throughout the organization. 

Execute on ASC and Centers of Excellence Strategy, Add Technology without Cost

Kate Gillespie, RN, MBA, NE-BC, began her career in critical care, moving into nurse management and then service line leadership. She currently serves as  Vice President of Musculoskeletal and Neuroscience Service Lines, Virtua Health. Her first exposure to orthopedics was as a Six Sigma Black Belt advising Virtua’s Joint Replacement Institute (JRI). She then became Executive Director of the JRI and now serves as Vice President for Virtua’s five-hospital system in northern and central New Jersey. Ms. Gillespie’s most important strategic issues include:

  • Plan and execute an orthopedic ambulatory strategy. While many hospitals and health systems largely focus on traditional inpatient joint replacement, Virtua enlarged its strategic plan in anticipation of robust growth of outpatient orthopedics, proactively shifting cases to ambulatory settings. CMS’ January 2020 ruling allowing total knee and total hip replacement to be performed on both inpatient and outpatient bases will accelerate the migration of traditionally inpatient bound cases to ambulatory settings—both hospital outpatient departments and ASCs. Virtua’s response to this change is to direct physicians to admit patients as outpatients unless documented complications and comorbidities justify an inpatient admission. In 2018, the system performed 8% of orthopedic surgeries in same-day surgery. Today, 40% to 50% are done as hospital outpatient/same-day surgery. With a system-wide volume of 1,700 joints per year and in anticipation of more outpatient cases, Virtua opened a new ASC in March 2019 to accommodate increased outpatient volume.
     
  • Consolidate services in centers of excellence. Virtua Voorhees’ Joint Replacement Institute model of an orthopedic “hospital within a hospital” has been a super-regional leader in joint replacement. The JRI has long been known for is high quality outcomes driven by standardization of best practices, use of robotic technology and differentiated improvements in patient outcomes. Virtua now consolidates joint replacement cases at JRI for their southern region hospitals and will replicate a consolidation model in the northern region at their Virtua Memorial Hospital.
     
  • Consolidate technology access. The system has sent all southern procedures to the JRI and offers robotic technology and has a plan to provide robotics in the northern center as well. Ms. Gillespie states that Virtua conducts outcomes research on Mako assisted cases and has found a reduction in trays, improved cutting precision and is complementary with minimally invasive approaches.
     
  • Decrease margins with outpatient procedures. As vendors are asked to partner and innovate with the system, Virtua’s message is, “don’t add to cost per case; zero cost increases.”

As President of NJSNA, Ms. Gillespie advocates for nurses, as well as educates on current trends in the profession, including the greater presence and need for nurses outside of acute care, in the outpatient arena and in community settings. This expanded focus on ambulatory settings is applicable to both community- and academic-based nurses.

Orthopedic Company Takeaways


Novel opportunities for vendors are not always evident, and fostering innovation requires substantial focus, dialogue and transparency. With the groundswell of orthopedic cases moving to ambulatory settings, vendors that nimbly react to this transformation can position themselves more advantageously, selling an expanded model of purchasing, aligning with rather than skirting hospital/physician collaboration and pursuing a greater integration with provider care pathways across the orthopedic continuum. Companies committed to such activities may find themselves in sustained strategic partnership with providers.

This article was adapted and originally appeared on ORTHOWORLD.com.



Patrick Vega, MS
, is Consulting Director for Vizient Advisory Solutions. He consults with member hospitals, health systems and physicians in musculoskeletal services with a focus on high value care by aligning cost, quality and performance.