Hello, my name is Jean-Pierre Maubasser and I'm the current president of Goodman Campbell Brain and Spine. Goodman Campbell Brain and Spine is a large multi-specialty neurosurgery group in Indianapolis, Indiana. Our group is primarily comprised of subspecialists within neurosurgery so that we can deliver the best care in each of the surgical subspecialties within neurosurgery. We also have interventional pain management and neurointerventional radiologists. Today we're going to talk about private practice and the private practice model. Obviously, that is a shrinking part of our healthcare system and there's a good reason for that. The costs of providing healthcare continue to go up every year when you look at the cost of an electronic medical record, the online security costs that are going on with legal issues and cyber attacks, rising staffing costs and reimbursement declines such as Medicare decreases such as 3.5%. You can see there are a lot of reasons that it's become extremely difficult to be successful in private practice and to maintain a financially viable practice. Private insurances frequently base their agreements with private groups on the Medicare agreement. So a Medicare agreement that decreases by 3.5% is also going to affect your private contracts as well. Let's spend a little bit of time on healthcare economics because as a resident some of this may be a little bit new to you. There's two different types of fees. There's a physician professional fee and that's what a physician gets paid for the services they render. Then there's also a hospital or ASC facility fee. ASC stands for ambulatory surgery center. Typically, facility fees are significantly higher than physician fees. So in a private model, how do you survive? Well, you have to look for ancillary sources of revenue. Number one is an ambulatory surgery center. This is where a physician can actually own part of the facility and collect on the facility fee in addition to the professional fee. Sometimes that amount of money can almost equal your salary as a neurosurgeon. So that's a significant benefit in the private practice model. There's also call contracts where you cover emergency rooms with hospitals where you can charge the hospital for those services. And then if you manage a service line such as our group which manages the neurosurgery services lines, then you can have these management service agreements which can also bring ancillary revenue into the group. You can own an MRI machine, you can have physical therapy in your office, and you can provide braces to your patients. So there are multiple different ways that you can bring revenue into a group on the private side. There's a new threat on the private side as well called private equity. Private equity groups are looking at providing upfront lump payment sums to the physicians in order to buy their practices. Obviously this can be attractive to an older physician near retirement who when they leave is going to get nothing. Now all of a sudden they're getting a big payment for their practice. But what this can do is it puts the younger partners in a very precarious position because now they answer to private equity as their bosses. They now answer to a financial person in how they make their decisions rather than somebody who cares about the patient outcomes and how they're going to take care of patients and at the same level that they're used to. Let's talk about ownership models with groups. Some groups, the very large ones, may own their own surgery center entirely. So that ownership would be part of being in the group and that may be a benefit when you eventually become a partner within that group. You can also own individual shares in a surgery center if the group itself does not own its own surgery center. And so that would be a personal payment to you from the surgery center as a member of that surgery center. So obviously when it comes to surgery centers, there are multi-specialty surgery centers and then there are some that are single focused. Right now when it comes to surgery center reimbursement, neurosurgical procedures and orthopedic procedures actually reimburse the best for a surgery center. So if you're in a surgery center that is made up predominantly of neurosurgeons and orthopedic surgeons, you're going to see higher reimbursement than a general multi-specialty surgery center. I'm not sure how many residents are aware, but there are such things as physician-owned hospitals. These physician-owned hospitals are showing great outcomes, cheaper cost to provide the care, shorter length of stays, and higher patient satisfaction. And these have been established for several decades. There are still the ability now to have a physician-owned hospital, but it cannot involve government payers. You have to imagine if you have a partnership with the hospital system and you're taking patients out of their system or are privately insured, that's going to lead to relationship issues. So you can imagine the politics involved in that relationship going forward and why these aren't springing up everywhere. What does the partnership track within a private model? Typically you have to be board certified. We know in neurosurgery that can be anywhere from three to five years of a process. There's going to be a buy-in when you join a practice. Typically that's based on assets that the organization itself owns. Sometimes that buy-in can be significant, but if it is, you're also getting that money when you're bought out at the end of your practice. Some organizations try and keep the buy-in low by not having a lot of assets within the group itself, and therefore they don't have to charge as much. And the group you join should be able to show you the calculation and how they arrive at the buy-in and the buy-out. One of the competing models is hospital employment. It's a much simpler model because it works on a dollar per RVU system. And what that means is there are relative value units assigned to the procedures we do as neurosurgeons. You do those procedures throughout the year, and then they give you a number, typically in the $70 to $90 range per RVU, and that's how you arrive at your salary. If you reach a threshold, typically for a lot of hospitals in the $12,000 range, give or take, then you may get a bonus for all the additional RVUs that you're doing over that level. There may be a guarantee associated with your initial agreement with the hospital, but you need to understand and be aware of what this guarantee is. Sometimes if you don't reach certain thresholds or don't bring in enough revenue to the hospital system and decide to leave early, you can owe that money back. So again, something very important to be clear about and understand. Some of the hospitals or more academic centers are moving away from ASC ownership by individual physicians, and basically the number they're offering has been calculated to include what you would make if you owned a surgery center ownership share and if you're taking call. So the initial number you may see guaranteed by a hospital or by an academic center is trying to incorporate those things as well in order for the total revenue that you can make in a academic or hospital system be somewhat equivalent to what you could own in a private system. So the bigger number you may see in an agreement will not have ancillary opportunities typically beyond some of the surgery center agreements that may still exist. So let's also talk about the private model. How does that work? Well basically the private model is going to be the revenue of the group minus its expenses. So you're going to have an overhead model within that. Usually it can be evenly distributed amongst the physicians, but sometimes there's actually a prorated overhead model based on your productivity. On the revenue side, most systems work on some sort of productivity system for that side of the model because they want to incentivize physicians to be busy and work hard. There's also going to be productivity bonuses sometimes based on certain thresholds that you may reach within the group. Ancillary revenue, as we've talked about before, is going to be absolutely critical on the private model side in order to bolster that reimbursement. There's also the opportunity for multiple retirement vehicles within a private model based on some of the things we discussed earlier. Overall, it's really important to know yourself. You need to understand what is important to you and what kind of person you are so you choose the right model. If having independence and control is really important to you and you're an entrepreneurial individual, then you're going to want to try and be in a private model. If stability is really what you crave and you're okay with a dollar per hour view system, which is very simple, and having that guaranteed money each year is more of your speed, then you're going to do well in a hospital or an academic model. There is not a right way. These are just two different opportunities. I think knowing yourself and what's important to you is going to give you the best chance at choosing a job that's going to work out for you and reduce the chance of you having to look for another job. Remember, as much as 50% of neurosurgeons change practices within the first few years of practice, I think largely that's because they're not paying attention to these details and understanding what really matches them the best.

Jean-Pierre Maubasser

private practice model

healthcare

rising costs

financial viability