The Rise of the Orthopedic Supergroup

Originally published on Becker’s ASC Review

In 1966, Eric Clapton, Jack Bruce, and Ginger Baker formed the band Cream. Each member was a star in his own right, leading most music historians to crown Cream as the very first “supergroup,” coining the now popular phrase.

Today, it’s orthopedic supergroups that are on the rise. Orthopedic surgeons are finding practical and strategic advantages to joining forces and integrating their organizations. For some practices, these orthopedic supergroups can represent the best possible way to remain competitive. But for others, the costs may outweigh the benefits.

What is a Supergroup?

An orthopedic supergroup is a fully integrated organization that combines and consolidates independent orthopedists and orthopedic groups into a single practice with a single tax identification number. There are several models one might follow when forming a supergroup. The most common such options are:

A traditional medical group, with standard operations and simple compensation pool.
A holding company with subsidiary orthopedic groups.
A “group practice without walls,” in which each orthopedic group operates as its own separate division, with its own unique profit and loss center.

Why Are Supergroups Forming?

Supergroups present enormous advantages when it comes to combining resources, leveraging payer contracting networks, reducing costs, and accessing economies of scale. In this way, supergroups can protect against reimbursement reductions and address patient concerns about the increasing cost of healthcare.

In an era where big hospitals and practices can control a regional market, supergroups offer a strategic advantage, allowing more modestly sized practices to remain independent and position themselves for growth.

Successful Newly Formed Supergroups

Successful orthopedic supergroups have formed all across the country. Examples of particularly successful supergroups include:

Tennessee Orthopaedic Alliance and Mid-Tennessee Bone & Joint Clinic: Based in Nashville and Knoxville, respectively, this new supergroup boasts over 100 physicians and 800 employees.
Florida Orthopaedic Institute and Ortho Care Florida have merged to offer patients access to 150 providers across 17 locations in Tampa Bay, FL.
Ortho Alliance NJ is a merger of over 7 unique practices, and this supergroup now includes over 100 physicians across 25 locations in the state.
Ortho LoneStar is a completely physician owned supergroup in Texas, combining over 150 physicians across 40 locations.
OrthoCarolina is a long term model of success. Formed in 1998, OrthoCarolina has grown from 22 to 158 physicians and accounts for over $250 million in annual revenue.

Key Advantages of an Orthopedic Supergroup

Supergroups are on the rise in large part because they offer substantial and substantive benefits–on both organizational and personal scales.

A supergroup will have an improved ability to develop ancillary revenue enhancements, such as Ambulatory Surgery Centers (ASC), Imaging Centers, or Physical Therapy and Rehab facilities. Supergroups also present an opportunity to broaden specialized programs and services, such a spine, hand, joint, or sports medicine services.

Additionally, because a supergroup represents a larger patient base, they will have enhanced negotiation power with managed care payers and insurance networks.

Financially, supergroups will have access to economies of scale for vendors, administration, staffing, and operations. Supergroups also have improved access to capital for technology and growth as well the ability to centralize that technology for clinical integration.

An orthopedic supergroup may also lift some of the weight off of each surgeon’s shoulders, improving personal quality of life.

But There Are Some Disadvantages

There are some drawbacks to forming a supergroup. For one, they are costly and complex to form and the larger they become, the more complicated they are to govern. In some ways, running a supergroup is like managing a large enterprise.

Surgeons who form supergroups do also give up some of their autonomy in order to maintain the centralized infrastructure and management.

Should You Form a Supergroup? Some Key Considerations

Physicians should consider the alignment of cultures and practice values before any supergroup formation takes place. Staff salaries and benefit structures should also be considered, as should quality and utilization profiles. Additionally, if an orthopedist or orthopedic group is already a member of an IPH, PHO, or ACO, there may be restrictive covenants already in place you should consider.

Foundations for Success for Orthopedic Supergroups

When forming a supergroup, it’s essential to build from a strong foundation. Surgeons should plan for:

Financial Integration: Participating practices must be integrated financially in order to be able to bargain collectively with payers.
Clinical Integration: This includes investment in information systems, data analysis and reporting capabilities, and the human administration resources necessary to run clinics. Clinics must be able to implement care and utilization management programs.
Managed Care Contracting: Supergroups will leverage your value proposition and size to secure managed care contracts that more fairly reimburse your supergroup and stay ahead of inflationary healthcare costs.
Technology/IT: Supergroups can deploy systems to efficiently manage patient care, healthcare costs, and medical billing to put yourself in the driver’s seat with powerful analytics and top-notch digital security.
Revenue Cycle: Employ best in class coding, billing and AR management to deliver maximum revenue and minimize compliance risks and recoupments with revenue cycle expertise tailored to your group and specialties.
Costs (variable and fixed): Find cost reduction opportunities in economies of scale and position your supergroup as the lowest-cost, highest value model for healthcare delivery in negotiations with 3rd party payers and provider networks.
Marketing: Clearly define your identity and pool resources as you grow to build a marketing presence that effectively addresses top orthopedic healthcare needs, attracts patients and surgeons to your supergroup, and provides real-time insight into programs that are providing the greatest value.
Legal: Secure legal counsel to appropriately represent, advise, and structure your organization to ensure compliance and mitigate legal risk.
Corporate Structure: As you grow, carefully craft your surgeon partnerships and administrative structure to build a framework upon which a larger organization can flourish.

Rising Fast

Orthopedic supergroups represent a significant opportunity for practices large and small. In 1966, Cream changed music forever. It’s safe to say that orthopedic supergroups are doing the same thing today, improving the lives of both patients and physicians.

References:

[Ref 1] https://www.beckersspine.com/orthopedic/item/51519-a-rising-trend-4-new-orthopedic-supergroups.html

[Ref 2] https://www.beckersspine.com/orthopedic-spine-practices-improving-profits/item/43290-are-super-groups-the-future-dr-nicholas-grosso-shares-insights-on-the-benefits-of-private-practice.html

[Ref 3]

[Ref 4]

https://www.pinnacleiii.com/retain-attract-surgeons/

[Ref 5]

https://www.beckersasc.com/pdfs/1_Thursday_Oct_22nd/Track%20A/6_Thu_0350pm_Murrey.pdf

[Ref 6]

https://www.physicianspractice.com/view/ipas-and-super-groups-are-they-you