Can an independent surgeon offer case rates?

Someone's told a fib. Yes. Independent surgeon's without a surgical suite in their office can, and frequently do offer bundled price surgery. Learn how in this article.

In speaking with the wife of an independent orthopaedic surgeon, she was told, either with nefarious and anti-competitive intention, or ignorance that her husband cannot and should not offer bundled price surgery. So we challenged her to think critically: “Why not?”

In the case of bundled price surgery and independent surgeons, the bundling initiative usually comes from the hospital. But the initiative can come from the surgeon. In many cases, the bundle is simply a matter of basic supply or value chain optimization. 

We asked our key expert, Maria Todd, of AskMariaTodd how it works and here’s what she explained:

How it works

image of maria todd, medical tourism business development expert
Maria Todd of AskMariaTodd™

“Independent surgeons can and frequently do offer more complete bundled packages than the more than 51% of surgeons who are employed by a health system. 

  • For one thing, they own their professional brand and are free to create “branded products” to make them available for sale on a direct-with-consumer or direct-with-employer or direct-with-TPA basis.
  • When they build the bundle, they can decide at which facility they prefer to carry out the surgery. 
  • They may need both a full-service hospital partner and an ASC partner. The reason for this is twofold: because of insurance stipulations and/or network participation considerations, and because of the patients’ conditions that may choose their “product.”  If the patient has a complicated medical history or is not well, they may decide that the hospital is a better fit than an outpatient center. A third element for consideration may be booking availability.

The bundled price program architecture

Maria Todd explains that the surgeon or his/her team will need to “subcontract”, in writing, all the supply chain partners who will be involved in the infrastructure of direct and indirect patient care. This includes:

    • their own services for the duration of the episode of care that they design
    • any facility (and for ASCs this means its transfer agreement partner as well as the ASC)
    • the anesthesiologist
    • first assistant, if required
    • the scrub tech and circulating nurse (if those services are not bundled into the facility payment)
    • the implant or hardware or supplies, or prosthesis
    • an ambulance service in the event of an emergency transfer
    • the services of a pathologist (professional and technical) to examine tissue that has been removed during a procedure
    • intra-operative radiology (professional and technical)
    • dental imaging, if a pre-operative panorama x-ray is required to check for occult infections that may be present on admission or pre-operatively
    • the services if any psychotherapist or psychiatrist you may wish to bundled in
    • home- and hotel-bound services, including nursing, home infusion, pharmacy delivery, meal delivery and nutritionist or dietitian services
    • skilled nursing facility rates for overnight accommodation, when required
    • physical therapy services or clinic-based physical therapy and occupational therapy
    • cardiology professional services if a pre-operative ECG is required
    • lab draws and specimen analysis for peri-operative lab testing
    • imaging services (pre-op and post-operative
    • casting, bracing and other similar supplies (such as in the case of a mastectomy or 360º body lift, the undergarments required)
    • inspected and approved hotel(s) at exclusively discounted rates. Choose hotels and accommodation options appropriate to the patient’s situation and aligned within their budget. Sometimes a vacation home rental service may be appropriate, but you’ll have to inspect them and be assured that the patient is assigned to the same unit you inspected for fall hazard, stairs, trip hazards, fire safety, security, neutropenic hazards such as  organic plant matter, placement of electrical outlets, placement of air vents for air conditioning and fan drafts, handling of blood-borne pathogens, by the housekeepers, WiFi service, cable TV, topographical elements such as steep hills to climb or descend to access the door(s), noise, lighting, etc.  When the hotels ask your estimated frequency, if you can reasonably promise 30+ nights per year, they will be quite receptive and generous with their discounts and upgrades. Make sure the upgrades for room location and amenities is actually relevant in the consideration of patient needs. For example upgrades to a higher floor may not be a good thing if the fire department cannot reach the upgraded room with ladder apparatus or if the local fire department does not possess aerial apparatus at the station closest to the accommodation.
    • ground transfer services (hired town car service, shuttle to and from the airport, etc.), but not an ad hoc service such as Uber or Lyft if you cannot pre-select the driver and the vehicle and vet driving history and insurance because of the random assignment nature of the service.
    • the services of a specially-trained travel agent who understands medical travel needs and altitude physiology or will agree to follow your explicit directions for travel planning
    • a means to accept payment via credit card, electronic check or wire transfer or ACH
    • a means to pay all your supply chain partners via ACH
    • a contract template to use for subcontracting the supply chain and local value chain partners
    • the services of an attorney familiar with health law regulations and provider contracting and subcontracting and third-party payer contracting
    • a payroll service or a payment processing clerk to pay all providers at the time of service, without delay.”‘
    • financing partners who will help cash pay and high deductible plan patients pay for their surgery package, in full, without recourse exposure and hefty (20-35%) discounts or high finance charges. There are so many out there available and eager to collaborate.

The above list comes from Todd’s numerous internationally-published textbook titles on medical tourism program development and bundled case price development. She has been developing bundled price surgery programs since the early-1990s with excellent success. She explained that there are a lot of moving parts to the creation of the bundles. She said that, “often when a surgeon has these notions about bundling case rates, they think of their part and overlook all the other minutia and moving parts that must be controlled for the sake of brand integrity, image, and continuity of care.” When they realize that not only will they need the infrastructure and case rate architecture, but that the architecture and price basis will be dependent on the type of payor that is involved. 

Much like the plight of concierge primary care physicians, the product must adapt to Medicare beneficiaries, cash pay patients and those with insurance coverage or self-funded employer coverage that may or may not pay for all the services included in the bundled rate(s) by procedure. 

  • Cases such as total knee replacements and total hip replacements, spine cases, and others may be safely done in an outpatient ASC setting, but Medicare won’t pay for the implants or the surgery in this setting… not yet, anyway.
  • Cases done in a critical access hospital will need to be paid at least the rate in their Medicare rate letter.  They may object to doing cases that don’t yield any inpatient days if the surgeon likes to discharge the patient sooner than three days.
  • Until you know how the ASC staffs its ORs, pre-op and PACU areas, you cannot finalize or carve in stone your supplier agreement. Until you know how credentialing and privileging is done at the ASC and at the hospital, you cannot delegate credentialing to them – or, they may not wish to accept delegated credentialing. If the latter, you must budget to do proper credentialing and privileging of your “vendor” collaborators and outsource or internally perform credentialing, privileging according to some written criteria that must be supplied in template form or developed for you first, and then have someone with the software and know how to do all primary source verification of all clinical and facility vendors, including your accommodation and car service/ground support partners, including criminal background and insurance checks. The fact of the matter is, someone has to do this and warranty and guarantee its accuracy for an insurer or an employer or a TPA to accept your product as developed.

These are technicalities that most doctors, their wives and their office managers may not be aware of. That’s where Todd delivers much of her value. She brings the technical knowledge, experience, billing and contracting acumen. But she also leverages that rare understanding of the environment behind the red line on the floor as a former OR nurse, and the marketing and branding knowledge needed to design the program on the front end, and the digital marketing with a certification from Google to advise on internet marketing for the program on the back end once the products are created. 

What she doesn’t do is act as the actual developer to “do” the turnkey network development. She designs the program, provides the contract templates for attorney review and approval, architects the products, guides the pricing logic and integrity, provides guidance for contracting with employers, TPAs, and insurers, and trains the staff what to do and how to do the work required to build the local value chain. Over the years, only one client has ever been financially able to hire her to build the network for them and they were backed by a private equity investor group.  Most surgeons don’t realize how much work is involved to do this correctly. Once it is developed, there are additional expenses to maintain your “network” and “product” and contracts with payors. 

Program and product development and administration

If you begin with the intention of cash pay surgeries only, the third-party payor complexities disappear. Everything else is still necessary, including the credentialing and privileging and vetting. “Essentially, what you are building is tantamount to a solo-surgeon-owned mini IPA, ACO or PHO, and your accounting, provider/supplier settlement, contracting, and concierge services are arranged and operated through a mini-MSO. If you don’t know what those acronyms are and how they work and are organized, you just added months of time, organization and learning curve to your project.” she explains.  

Todd adds that one specialty group that has done this successfully has been bariatric surgeons and cosmetic surgeons. Orthopedic surgeons could launch a pilot program with knee, hip and shoulder replacements or carpal tunnel, or fracture care and ORIF cases, but not all of them at once. Spine and concussion treatment neurosurgeons have also built case rate programs that include the post-injury concussion management programs and services they offer. Many of the specialists that do in-office procedural medicine (cardiology, dermatology, allergy and immunology, interventional pain management, oncology, and others) can also offer bundled price packages as a “product” to cash pay patients where the services of an operating theater outside their private office are not required.

Compliance with state, federal and local laws

Compliance is an issue because various regulatory compliance is necessary for Stark, Federal Anti-kickback prohibitions, HIPAA, and FTC truth-in-advertising laws apply as do FDIC regulations if you extend payments beyond 4 payments. 

There are liability matters to deal with. Credentialing and privileging brings with it ostensible and vicarious liability risks and complaints if you decide you cannot contract with a potential collaborating vendor or supplier because of conflicts or other reasons listed in your pre-developed criteria and standards. Risks associated with hotel and accommodation  fall hazards, security and fire hazards must also be managed. Risks associated with in-flight accidents and motor vehicle accidents must be addressed. One cannot say, “I just won’t include them in my package” and attempt or expect to maintain control over quality, safety, brand impression, and patient/companion user experience.

Contracting for subcontracted health services can give rise to antitrust considerations and contract drafting challenges associated with essential market force, pricing among competitors, restraint of trade, monopoly, monopsony, and balance billing, surprise billing, markups, and procurement contracts, terms and conditions for implants and prosthetics, bracing, footwear, garments, and other supplies are required to round out the package.

For example, one bariatric surgeon Todd assisted had to establish his own account with suppliers for banding implants because he walked in to the ASC one day and learned 35 minutes before surgery start time that the implants for 4 consecutively scheduled cases that morning were not ready because the ASC was on credit hold. He called the rep, wrote a check for what he needed, and later that day established his own accounts with suppliers. Then the ASC had to immediately convene the quality committee on an emergency conference call to adapt its policies and standards in a hurry to include such an arrangement where the surgeon supplies their own self-purchased implants so that the ASCs accreditation would not be jeopardized.

Marketing your program and product 

Once you have your program developed, you’ll need a website and landing page dedicated to this product and program. Writing the content verbiage for your website and landing pages is an art form in itself. The content must appeal to a particular ideal client. There is no successful one-page-fits-all system to attract and speak directly to corporate benefits advisers, TPAs, employers, insurers, and consumers about your program. Each will have different focus, information, answers and snippets, and SEO treatment to be successful and promote your brand properly. Each will have different features, benefits, and brand promises and advertising copy. 

Todd adds this warning: “If you succeed at attracting group health purchasers, you should also included non-compete language in your contract that protect your investment and raise up barriers to entry from the facilities who can copy your model in a week’s time.” She’s witnessed some very nasty behavior against entrepreneurial physicians and surgeons who have been successful with bundled prices for episodes of care. The hospital or ASC may agree to participate and collaborate at first because they don’t believe you can pull it off and be successful. The envy and resentment sets in when they see the surgeon making the margins instead of the facility. Be prepared for this and have a backup plan to reroute patients if things get ugly. “Having another option ready to deploy makes some facility administrators think twice before killing their goose that lays golden eggs (um, that would be you…)” “Also have a good antitrust attorney relationship if the behavior of the facility or ASC breaks the law with boycotts, OR booking restrictions, unreasonable or unwarranted sudden device and supply manufacturer boycotts, and other alleged or arbitrarily  and capriciously enforced policies.” she adds.

Business Development

Once those landing pages are created, you can list your services in various databases, and marketing platform services. SurgeryShopper.com is one of those platforms, and currently the only one that advocates for providers and independent consumers. There are several platforms and databases that advocate solely for TPAs and employers and treat the providers unfairly and use contracts that appear no different than PPO agreements and HMO agreements.

Each category of visitor will have different business development tactics to be deployed if a web page visitor converts to a call, which further converts to a live prospect. You may need to spring for airfare and accommodation for any out-of-town group health buyers who agree to make a site visit to experience your location, service, and see where their plan participants will be operated on. Someone you trust must be appointed to direct business development, pursue opportunities, provide site visits and host your visitors, and negotiate and execute and maintain the contracts. This is a full time role. 

If you cannot afford full time devotion to this activity, your program growth rate will suffer. Todd often sets up the program for her clients, gets the product and program developed and documented, creates the website landing page content, gets the contracts with subcontracted providers drafted and approved by competent legal counsel. She then follows with the hiring and training of business development director and personnel roles. For training, implementation and program operation, she brings decades of hands-on experience having performed in each role, personally. She doesn’t know of any other consultants with this combination of expertise and skills to do this through one single boutique firm. We couldn’t locate any in our own research.

Once your program is ready to market, you are most welcome to discuss listing your prices and marketing on Surgeryshopper.com.