Becker's ASC Review

25 ORTHOPEDICS Direct employer contracts gain steam in spine By Laura Dyrda S pine and orthopedic groups have seen an uptick in prior authorizations and denials over the last several years, and many are looking for innovative ways to sidestep insurers. During a panel about payer trends at the Becker's 21st Annual Spine, Orthopedic & Pain Management-Driven ASC + The Future of Spine Conference in June, private practice leaders shared insights on the current payer landscape and plans to develop new partnerships in the future. "We are exploring how we can very quickly develop a direct to employer model," said Vishal Mehta, MD, president and managing partner of Fox Valley Orthopedics, based in Geneva, Ill. "We've had some success there and are really interested in that going forward because we think we can demonstrate true value to employers and cut out some of the issues we're having with [insurers as] the layer in between." Fox Valley is in the position to go directly to employers because the practice has gathered outcomes and cost data. The group can pinpoint value for employers and create an attractive package for companies desiring an alternative to the traditional insurance coverage model. Adam Bruggeman, MD, CEO of Texas Spine Care Center, said while it's difficult to cut out insurance companies and go direct to employers in most markets, he has seen some movement in that direction, especially as tech companies relocate to Texas. "Direct to employer [contracts] are definitely something to watch," said Dr. Bruggeman. "The employers are frustrated and they're actually suing the insurance carriers now for basically being bad business partners with them on their insurance products." Columbia (Mo.) Orthopaedic Group is ahead of the curve for direct employer contracting. The practice launched an insurance product for employers, including coverage by its physicians. "We went out to the employers and said, 'Hey listen, you can save 40%. Come join it.' The employers are jumping to it pretty quickly," said Andrew Lovewell, CEO of Columbia Orthopaedic Group. "We're trying to cut out the payers in our state because they're just bad news and they're not designed to save anybody any money. They're getting in the way of the economy of medical practices today." The movement for a more consumer-focused approach to healthcare, coupled with rising costs, could be a boon for independent spine and orthopedic groups willing to fill a clear need within their communities. The demand for orthopedic care will increase in the coming years as the aging population grows and people desire to stay active longer in life. "The direct to employer route and actually getting down to the consumer level is going to be very disruptive in the future," said Mr. Lovewell. "A lot of employers are sick and tired of paying the insurance companies all this money, and you're seeing a lot of them go after the payers and request their data to figure out what it all means." n to maintain autonomy and leverage economies of scale to remain financially viable and better control costs. Q: What advice do you have for private equity groups who want to grow in orthopedics? What changes can help PE be more trusted as an option? AB: For PE groups looking to partner with MSK practices, the importance of understanding culture cannot be overstated. Additional infrastructure and support are imperative for growth but should not come at the cost of sacrificing the culture within the practice. Both the PE sponsor and the physician group should take time to understand one another's culture to ensure they are the right fit. Q: Some orthopedic groups have formed alliances to support each other that don't have private equity backing. When you think about the future of independent orthopedic practices, how important will PE be? AB: Many practices want to grow while still maintaining independence and, for some of them, the PE model can be the right fit. For others, the alliance model can be a viable alternative for groups who are looking to grow through collaboration and shared knowledge. One of the challenges some practices have faced when considering the alliance model is the lack of meaningful data to obtain true insights into their operations, specifically for small to mid-sized groups. Also, some alliances have had varying degrees of success primarily as a result of a lack of investment or capitalization. As far as the future, it is critical that there continue to be multiple partnership options for MSK groups looking to scale. Different practices will have different needs and different goals, so having differentiated models will ensure practices can choose the best partner based on their unique needs. n "For PE groups looking to partner with MSK practices, the importance of understanding culture cannot be overstated. Additional infrastructure and support are imperative for growth but should not come at the cost of sacrificing the culture within the practice. Both the PE sponsor and the physician group should take time to understand one another's culture to ensure they are the right fit." — Alex Bateman

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