Here are many of the pros and cons of both scenarios, and some practical guidance to help tackle the challenges of each option.
Standalone practice
While a standalone practice may offer many perks — you essentially determine your income, control your staff and dictate your on-call relationships — it also carries with it many challenges, including developing a good referral base, negotiating managed care contracts, and then there’s the small issue of overseeing a business and doing so successfully.
Financial autonomy
Probably the most obvious benefit of a standalone practice is the financial autonomy.
“What you kill is what you eat, basically,” says James Hansen, MD, founding member of Austin (Texas) Neurosurgical & Spine Institute and a partner at South Austin Surgery Center. Assuming you have access to cases, “you can determine your own income.”
But such autonomy also presents significant challenges.
Taking time off — for vacations or an illness — effectively ends your income while you are out of the office, says Dr. Hansen. It may take significant time to build up enough revenue that you can afford and feel comfortable bringing in no revenue for a few days.
There are also other ramifications to consider, such as what will happen to referrals sent your way that you cannot accept because you are out of the office. If the referring doctor isn’t willing to wait for your return and sends another physician the case, you may risk losing the referral if another physician accepts and delivers an impressive outcome.
Developing referral sources
Perhaps the most critical questions a spine surgeon must answer before deciding to make the leap and go solo is where his or her patients are going to come from at the start, and what avenues exist to build a strong referral base to ensure a steady stream of patients.
“Maybe (the surgeon is) employed by a local hospital and there is the built in referral base for his spine surgery,” says Chris Shoup, a group vice president at Nueterra and former CEO of Spine Hospital of South Texas in San Antonio. “But if he’s not employed, and decides to go standalone, what kind of referral base is he going to have going forward to garner cases?”
Tip: The surgeon must then put in a great deal of work and communication to develop a strong referral base from the medical community, Mr. Shoup says.
“He has to go out, do a lot of legwork,” he says. “A spine surgeon must make an effort to reconnect with their referral patterns to ensure that the primary care and specialists remain in the loop. For example, an orthopedist sends a patient over for a lumbar laminectomy. I’m going to go back and tell the orthopedist what I did, thank (him or her) for the business, and try to build referral patterns that way.”
Tip: It is also important to not pose a threat to surgeons who are willing to refer cases to you, says David Abraham, MD, a founder of the Reading Neck and Spine Center in Wyomissing, Pa.
"If you can prove to referring orthopedic surgeons that you in no way compete with them — most general orthopods don't want to think about the spine — and that you respect the territorial nature of the spine as opposed to the rest of orthopedics, then you should be able to get to the point (where the cases come to you),” Dr. Abraham says. “The individual has to prove to the local orthopedic community that he is not a threat, and typically that is obvious because when you’re on-call, you give hip fractures away; you give ankle fractures away; you give general orthopedic care to people who are likely going to be your good referrals.
“About 80 percent of my surgical referrals are coming from orthopedic offices, and the orthopedists don’t ever see back pain anymore, don’t see neck pain anymore; they simply call my phone number,” he says.
Prepare to negotiate
It’s great to have referrals, but they’re only good if you can get paid for the work you perform.
“That’s another factor t a doctor has to consider: How am I going to get paid for what I do? How do I get on the managed care plans?” says Mr. Shoup. “A standalone practice will have to negotiate every individual managed care contract, especially if you’re in a large market.”
Since you cannot piggyback on an existing contract, standalone surgeons must be prepared for potentially lengthy negotiations, have a strong understanding of what they want to be paid for their procedures and also understand how to read a contract and identify potentially undesirable clauses that payors may try to include.
Tip: This is often where the services of a healthcare consultant or lawyer may be worth exploring, but these services are an expense that can come at a time when a surgeon is looking to stick to a tight budget as the business launches.
Ready to run a business?
Running a standalone practice requires more than just a surgeon and patients. It’s a business like any other medical practice, and requires a building, staff (and salaries and benefits), supplies for the staff, supplies for procedures and the many other financial investments.
“If you start picking apart the different aspects to the business model — drug and medical supplies, salary costs, managed care contracting, cash flow — there are so many roads that trickle off of that that they have to think of,” so surgeons must t consider whether they are prepared for and want to shoulder such a time-consuming challenge, Mr. Shoup says.
A common mistake made by a standalone surgeon, or even those in a small group, that can make running the business more difficult is hiring the wrong personnel.
“One big problem I see … is hiring an office manager that is a friend of a friend or has minimal education,” Mr. Shoup says. “That person is handling multimillion dollars' worth of your money and they don’t picture it as the business for what it is. You bill out millions of dollars every year; who is handling your collections billing and expense management?”
It may seem financially logical to keep expenses low when starting a practice, and spending less on salary is one way to do so. But skimping on staff who handle your billing or those who will negotiate contracts for drug and medical supplies can cause a practice to lose more money than it gains in salary savings.
Tip: Make sure to set aside time to find the right personnel, and then expect to pay more for the experience and value they will bring to your practice.
“Prepare for the cash outlay you have to pay for salary and benefits for somebody of a high level of professionalism,” Mr. Shoup says.
The good news is that as a standalone surgeon, problems with staff members are easily resolved as you have the say about who stays and who goes, a luxury not always found in a group practice, says Dr. Hansen.
Tip: Before starting your own standalone practice, learn some basic business skills and try to gain a better understanding of the business of medicine, even if it requires delaying the start of your standalone practice for a few years, Dr. Hansen says.
“My first recommendation is to take some time and learn some basic business skills, even if it needs to be taking a night course,” he says. “I took every college course I could, every AMA 'starting your practice' course that I could. Learn some basic business skills, and learn the business of medicine just so that, particularly if you’re on your own, you can maximize your earnings, you don’t make bad business choices, you don’t get the most expensive office and you’re able to make your rent payments”
Call rotation flexibility
As a standalone surgeon, you can choose to take emergency calls where you want to and with which organizations you want to affiliate yourself, a situation that may be determined for you if you were to join a group.
“The large group may have affiliations with a hospital system or a surgical hospital … and then you’re in a position where you have to do your (cases) over there,” says Mr. Shoup.
On the downside, there’s no one to cover for your calls if you go away for vacation, which may limit how comfortableyou feel taking time off .
Reputation is yours
Your successes (or failures) determine the reputation of your practice. You do not have to worry about a poor decision made by a partner drastically affecting your ability to run a successful business in the community.
“Your reputation stands by you,” says Dr. Hansen. “Your practice’s reputation is made by you; you don’t have to worry about someone else hurting your practice.”
Group practice
The work and stress needed to overcome the challenges of standalone practice can easily convince spine surgeons that a standalone practice is not in their interest and that joining an orthopedic group practice would be a better choice. While this scenario certainly alleviates some of the stresses of starting a practice, a spine surgeon interested in joining such a group must carefully weigh the benefits of this option and ensure the partnership they are considering allows enough freedoms and successes to make it a worthwhile alternative to entrepreneurship.
Reliable referral sources
When you join a group, some of the stresses of forming strong referral relationships are instantly alleviated.
“There’s safety in numbers,” says Mr. Shoup. “Your referrals are such that another doctor is not going to change his referral patterns because he likes someone (outside of the group) better. The big group that you’re in has a vested interest in maximizing the billing opportunities for you to maximize the partnership’s cash. There’s an intrinsic built in mechanism to go back and forth.”
Tip: You may still want to reach outside your group to establish relationships and receive referrals from other sources. If you do so, you will want to let the orthopedic surgeons in your group know that these referrals are not intended to help boost the orthopedic side of the practice.
“You’re going to want to say to your partners, ‘if Doctor Jones across the way sends me a spine, it’s very obvious that I’m going to send that patient back to Doctor Jones so he can understand that we’re not stealing his practice,’” says Dr. Abraham. “Spine is such a small fragment of overall orthopedic care that the group should not in any way be interested in using spine to market general orthopedics.”
Managed care piggybacking
Oftentimes, one of the perks of joining a practice for a spine surgeon is the ability to gain access to the practice’s managed care plans, and therefore have the ability to perform procedures immediately and get paid a good rate for the cases. Whether this is the case is an important question for the surgeon to ask when interviewing with a group.
“If I’m a neurospine guy and I’m looking to join a group, how quickly can I gain access to their managed care plans?” asks Mr. Shoup. “If I’m a new guy coming into town, will I be able to piggyback on their managed care plans?”
Getting paid fairly
The primary reason an orthopedic group will bring in a spine surgeon will be to keep in the spine business the surgeons were referring out. Spine surgery can be a very lucrative specialty, and a group can financially benefit by keeping the procedures in-house. How much it benefits is a potentially big issue of contention.
“The spine orthopods may be making considerably more than the general orthopod,” says Dr. Hansen. “There could be jealousy issues or they could be trying to average your income into theirs, which is not going to sit well for very well. The upfront issue of asking how the pay arrangement is going to be figured out is very, very important.”
When spine surgeons interview with a group practice, Dr. Hansen says it is important to ask financially relevant questions including the following:
- How do you get paid, and how is payment set up?
- Does everybody share the income? Is it pure productivity or some blended formula?
- What’s your vacation time?
- What’s your benefits?
- Are benefits weighted more toward the older guys? As you become the older guy, do you get some more benefits?
- What happens when someone retires? Does he or she get a payout? Are the remaining people expected to buyout the people who are leaving?
Tip: If a spine surgeon is displeased with the financial arrangement proposed by the group practice, it is not uncommon for him or her to receive an income guarantee that meets financial expectations but still lets the group reap the rewards of keeping the procedures within the practice.
If such an arrangement is acceptable for both sides, the spine surgeon may want to solicit the services of a lawyer to ensure a clear understanding the components of the contract.
“Get yourself an attorney who is versed in healthcare practices to review the contract,” says Dr. Hansen. “I would strongly recommend a contract so there’s no misunderstanding and so it has enough details. If you’re not interested in hiring an attorney, I would go to a much larger practice with younger guys because they’re more likely to have looked into those issues than if you’re just joining one other guy who may want to take advantage of the younger guy. I think it becomes a lot more important to have an attorney if you’re joining a much smaller group.”
While it is important for a spine surgeon to understand what he or she can expect as a base income, it is important not to overlook the value of joining a group practice and the costs that come with this partnership.
For example, with your increase in expenses, you can expect benefits that are going to be a little more generous for you and your staff.
“You can negotiate better arrangements with insurances, better arrangements with staff benefits because there are more of you and you have more buying power,” says Dr. Hansen.
There are also the benefits of joining a team that should already have well-qualified staff in place to handle essential processes such as billing and purchasing supplies.
“If I’m part of a big group, my drug and medical supply expenses are pretty much a given because they’re already accounted for, somebody is alreadymanaging that need,” says Mr. Shoup.
Understanding your costs
When running a standalone practice, the costs of running the business are fairly easy to understand and estimate since it’s all limited to operations of a single surgeon and the staff. But when joining a group, trying to determine how much of a surgeon’s income will go toward running the group practice’s business is a little more challenging
“When you get into a large group, you get into multiple layers of shared costs,” says Mr. Shoup. “I’ve heard numerous times from many different practicesthat shared costs have gone up incrementally because Doctor (Smith) has an entourage of people in satellite offices. I am an in-house surgeon at the main office without any satellite offices, and yet I have to share in the whole expense of the group.
“You need to look into and really estimate your costs,” he says. “While they may feed you your business, how much of it is going to get sucked out because of their operating expenses?”
Tip: It is essential to understand business when starting a standalone practice, but some knowledge in this area can also be of great benefit when joining a practice.
“Somebody in a group practice has to be a business man, and that person may not be around all of the time or may not want to do it, so it kind of behooves you to at least understand the business aspects for your own protection,” says Dr. Hansen. “If you don’t want to be a business man, you don’t necessarily have to, but it’s a little risky not knowing anything.”
Taking some time to better understand the business of medicine can help spine surgeons make wiser decisions concerning their own work, and can also allow for better monitoring of the practice’s expenses, which likely affects a portion of their incomes.
Know your partners to determine creative flexibility
Joining a practice means more than just sharing office space. It also means that you’re going to share a reputation with your new partners, and some of your partners may have particularly strong feelings about the types of procedures you should or should not be performing and the surgical methods you employ.
“You need to know your partners, know their reputation,” says Dr. Hansen. “Do they do things that you do? Are they going to be comfortable with you doing something differently from how they’re trained if you came from a different program? You should get to know the philosophy of the group, what they expect of you, what freedoms you are going to have to do your own procedures.”
If your partners have strong beliefs about how they perform procedures and expect you to emulate their methods, you may be able to learn from their techniques. The downside is that you may find yourself abandoning some of your training to conform, making you feel like a resident again, with your partners as the attending physicians, says Dr. Hansen.
Tip: The only way to gain an understanding of your partners’ expectations is to interview all of your potential colleagues, says Dr. Hansen.
“Bring up those issues because that’s not something that comes out in the open when you’re talking,” he says. “Can you be more cutting edge and try new things? Ask what kind of procedures that they do because some people do certain things, others do not. How they do certain procedures (if there’s more than one way)?”
Tip: If you want to develop a spine niche in a group practice and essentially become a sub-specialist, Dr. Hansen suggests looking for a strong group that already has sub-specialists in different areas so your vision is more likely to be understood and accepted.
Call rotation inflexibility?
If you join a group practice that already has spine surgeons, determining coverage for you when you go away shouldn’t be a big headache. But if you are the only spine surgeon in a practice and are interested in traveling for an extended period of time, requesting that your orthopedic partners cover for you may cause problems
“If you’re an orthopedic/spine fellow joining a general orthopedics group, you need to determine how coverage is going to be handled because not all of these orthopods may be comfortable covering some spine procedures,” says Dr. Hansen. “If you’re gone for vacation for two weeks and you’re the only spine guy, they may not be comfortable handling it.”
Another challenge a spine surgeon joining an orthopedic group practice may face is that the orthopedic surgeons may view the spine surgeon’s arrival as another body to take on some of the orthopedic call responsibility. If this is not something the spine surgeon intends to do, this issue must be discussed before the surgeon's joining the practice.
Note: This article and many orthers focusing on practical guidance for orthopedic and spine practices will appear in the January issue of Becker's Orthopedic & Spine Review.