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Simpler Surgeries, Complex Market

Elyas Bakhtiari, for HealthLeaders Magazine, May 11, 2009
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"Each department of surgery around the country is composed of slightly different pieces," says Thomas Krummel, chair of the department of surgery for Stanford Hospital & Clinics, a 613-licensed-bed hospital in California. There's no one-size-fits-all approach to grouping surgical services.

It may seem like an operational issue, but there are some significant strategic implications to how services are structured. Larger organizations with strong cardiovascular or orthopedics service lines may carve those out of the more general surgical service line, with separate operating rooms dedicated specifically to those niches. Stanford Hospital handles those two service lines separately, and the surgical department includes general surgery, cancer surgery, transplantation, colon and rectal surgery, trauma and critical care, plastic surgery, vascular surgery, pediatrics, and ED.

Smaller facilities may have no choice but to share call coverage and OR schedules across departments, including cardiovascular and orthopedics.

Structure matters because shortages of providers are forcing organizations to do more with less.

Specifically, there's a need for more anesthesiologists nationwide, and the supply-demand dynamic is driving up compensation levels and making competition fierce, says Kennedy.

Today's anesthesiologists also have the option of working at ASCs, which can offer higher salaries and a better work-life balance (in other words, no call), so hospitals are left trying to recruit anesthesiologists away from their hospital and physician competitors.

A scattered approach to issues like OR scheduling, financial contracts, and ED call coverage can mean losing a group of anesthesiologists, or a group of surgeons, to a competitor.

Service Line Success Key No. 2: Consider surgicalists
In the not-too-distant future, a patient comes to a hospital ER with bleeding caused by a large ulcer penetrating the pancreas. But the five-person surgical team on hand may consist of hand and joint orthopedic specialists, a breast surgeon, a minimally invasive surgeon, and a surgical oncologist. The person with the most experience with these operations—a general surgeon—is nowhere to be found.

That scenario is becoming more likely due to a worsening shortage of general surgeons. "General surgeons are becoming harder to find because there aren't as many, which is a concern for the country. The shift has been to specializations," says DeHaan, who identifies general surgery as one of the few surgical areas where Gunderson Lutheran is having trouble recruiting.

As surgical procedures have become more high-tech and specialized, so have surgeons.

Since 1992, the number of surgeons pursuing subspecialty fellowships after training has increased from 55% to 70%, and during the same time the number of general surgeons per capita has fallen by 25%. Reimbursement levels are part of the problem. Subspecialized surgeons tend to be higher earners, leaving few physicians interested in general surgery fellowships. On top of that, general surgery itself is becoming more specialized as physicians attempt to deal with reimbursement challenges, exacerbating the problem. "In many respects general surgery isn't the correct label anymore. Technology is pushing general surgery to not be so general anymore," says DeHaan.

The downturn in the development of general surgeons has left those who remain shouldering a lot more of the burden. Call coverage is a growing point of contention, and many general surgeons no longer want to participate without some sort of compensation. Private practice is equally challenging, as many of the procedures that used to be general surgeons' bread and butter don't offer enough reimbursement. To survive, surgeons in small or solo practices such as Sewell, who operates a solo practice in Southlake, TX, often have better success with out-of-network offerings like bariatrics and ancillary services like hair transplants or Botox. Nearly 60% of Sewell's current practice volume is bariatric surgery.

"One of the reasons why bariatric surgery has become such a phenomenon is many insurance companies don't pay for it. It's the ultimate out-of-network procedure," he says. "There are a lot of patients, a lot of demand, so a general surgeon can make a living doing bariatric surgery, but not traditional general surgeries, such as gallbladders and hernias."

Rather than deal with these market realities on their own, many surgeons are turning to hospitals. Both hospitals and private groups are increasingly employing surgicalists who, much like traditional hospitalists or laborists, work on site to treat hospital-based patients and often take a large share of emergency cases. From the hospital's perspective, it's a physician alignment strategy that is growing in popularity. Patients have shorter waits when in pain from vascular, colon, and appendix problems, for example, while the hospital is able to increase patient throughput. And though it can be expensive, employed physicians no longer pose a competitive threat to the hospital, meaning it can actually save money in the long run.

Service Line Success Key No. 3: Joint venture ASCs, hospitals
Employment is only one option for frustrated surgeons, however. Those who want to retain their independence or who still have an entrepreneurial streak are investing in ASCs or specialty hospitals and pulling surgical volume from local hospitals—an option that has been made more feasible by the reduced complexity of many surgical procedures.

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