How blessed I have been to spend the majority of my career in the orthopaedic industry. When I started in 1980, the environment was certainly different in the business of orthopaedics, surgical techniques and even surgical procedures. The advancements in all of these categories have been tremendous. An article or even a book could be written on any one of these areas. Within the space allowed, I am going to touch on the business of orthopaedics and try to engage you to think in a different way.
   In 1980 it was much easier to run a practice; after all, it was prior to managed care, diagnosis related groups (DRGs), negotiated insurance contracts, 90-120 day collections, large office staffs and talk of a major overhaul of the U.S. healthcare. These were the golden days of “Fee for Service.” It occurs to me that a majority of readers have never heard of “Fee for Service.” Find a physician over 55 years old and ask him to explain the concept, and you will see tears come to his eyes. Simply, it meant that the physician set his rates as he saw fit . A more formal term is “usual and customary” charges. Today, this is a term the insurance companies use to reduce their reimbursement to the member by setting their own “usual and customary” reimbursement. Interestingly, their “usual and customary” fee is always lower than the physician’s charges. Do you ever wonder where they found a physician who actually charged an amount that low, or how about a group large enough to establish a “usual and customary” amount?
   The business of orthopaedics starting changing dramatically in the mid to late ’80s and has not stopped. I guess in this case the saying is true: nothing is consistent but change. With the introduction of Medicare’s DRG, the reimbursement of fees started declining and insurance companies followed suit. At the same time, insurance companies started making it more difficult to collect on bills requiring more documentation and follow-up. To comply with the insurance companies’ increasing demands, physicians increased staffing to handle the additional work. Overhead started to skyrocket (See Exhibit 1.). This trend is not news to anyone today.

 

 

 

 

This pressure has created an environment for the practices to increase revenue in a multitude of methods. At the same time, legislation (Stark I) was passed to make this even more difficult. While the professed intention of this legislation was to prevent abuses by physicians, it seemed that the
underlying intentions were to punish the physicians in total. States started to adopt their own legislation that had similar language and intentions. Today we have to deal with Stark II, which has been covered and discussed in many forums, and many attorneys have built their entire career in this area.
   When I completed the sale of my distributorship back to the company, I had an orthopaedic surgeon friend ask me to help him find legal and effective ways to bring more revenues into his practice. After researching his request, I started a company, Strategic Orthopaedic Solutions, to help drive ancillary income opportunities back to the physicians. I only bring this point up to share with you several observations.
   Most of the standard programs of ancillary income, such as ambulatory surgery centers and imaging centers, had been around for several years. Moreover, it created an environment for the practice to look only for “home run” programs or those that could bring in several hundred thousand dollars a year. It certainly made good business sense to start with the home run; however, in many states these were not available due to CON (certificate of need). This required a new attitude on behalf of all surgeons; one of hitting singles and doubles. Today it still requires that same new attitude, along with adopting the following:

• Evaluate a program and how it fits into the practice. Get staff and management input; however, do not let them stop the program without good reasons that you agree with. Many times we see the physician, the owner of the business, give in to their management and staff simply because the management and staff do not want to take on more work or a new project.
• Do not over analyze the opportunity to the point of “Paralysis by Analysis.”
• Once the decision is made, embrace the program to make sure the implementation is correct and complete. Don’t assume your staff will get it done without them seeing your commitment to the program.
• Take and maintain the leadership role. Remember, if others have been successful with the program, so can you.
• Do not be afraid to Beta test the program in only part of the business to test and validate the program prior to a full roll-out.

   What are these singles and doubles? Today they consist of DME programs, in-office orthotics, asset protection programs, Deferred Compensation Programs, automatic patient appointment reminder, negotiated supply contracts. The list goes on and on. One of the fastest growing programs is in-office dispensing of medications.
   With the growth of anything new, controversy has arisen to the efficacy of providing such a service to the patient. Below we will look at the duality of the issue in regards to physicians providing point of care dispensing against the traditional written script. The American Medical Association has been at the forefront of this debate, as seen in the following opinion. (Please note, bold emphasis is mine.)

8.06 Prescribing and Dispensing Drugs and Devices
   Physicians should prescribe drugs, devices and other treatments based solely upon medical considerations and patient need and reasonable expectations of the effectiveness of the drug, device or other treatment for the particular patient. (2) Physicians may not accept any kind of payment or compensation from a drug company or device manufacturer for prescribing its products. Furthermore, physicians should not be influenced in the prescribing of drugs, devices or appliances by a direct or indirect financial interest in a firm or other supplier, regardless of whether the firm is a manufacturer, distributor, wholesaler or repackager of the products involved. (3) Physicians may own or operate a pharmacy, but generally may not refer their patients to the pharmacy. Exceptionally, a physician may refer patients to his or her pharmacy in accord with guidelines established in Opinion 8.032, “Conflicts of Interest: Health Facility Ownership by a Physician.” Physicians may dispense drugs within their office practices provided such dispensing primarily benefits the patient. (4) In all instances, physicians should respect the patient’s freedom of choice in selecting who will fill their prescriptions as they are in the choice of a physician and, therefore, have the right to have a prescription filled wherever they wish. (See Opinions 9.06, “Free Choice,” and 8.03, “Conflicts of Interest: Guidelines.”)1
   What these recommendations fail to address is the noncompliant patient as it relates to not taking their medications and the subsequent effect it has on the ability of the physician to adequately treat the patient. The staggering statistics of this effect are outlined in the information below provided by the National Association of Chain Drug Stores.
   Three out of every five doctor visits result in a prescription being issued by the physician. However, as many as half of all patients fail to have their prescriptions filled and as many as 30 percent fail to have their prescriptions refilled.
   Moreover, studies show that by the time the patient gets from the doctor’s office to the pharmacy, many have forgotten half of the doctor’s instructions about their prescribed medication.
   Estimates of the costs of noncompliance range from $50 billion to $100 billion a year. In fact, it is estimated that the medical complications that result from the medication noncompliance are responsible for the following:

• 10 percent of all hospital admissions
• 25 percent of all hospital admissions among the elderly
• 23 percent of all nursing home admissions
• Loss of 20 million work days annually2

   While it would seem in the best interest of physician and patient to limit noncompliance by providing these necessary medications in a more cost effective generic form at the point of service, the question of whether or not to provide this service can only be answered at one’s individual discretion.
   Moreover, there are several forms or formats of this program in the market place, and which format works for you is based on your individual situation. One thing to note: several of these companies are new to the market and have inflated earning claims.

Advantages of In-office Pharmacy

Quick and Reliable Dispensing of Medicine for All Your Patients
Fact: Pharmacies report that many patients leave the physician’s office and never fill their prescription. This statistic could be as high as 30 percent.
   Your patients will be provided medication in the clinic. Patient compliance will increase, because this ensures that the patient starts the medication immediately, eliminating procrastination of their responsibility to acquire their own medication from their local pharmacy. The process is quick, reliable and extremely simple.

Easy Program to Implement
   An in-office physician dispensing system takes less than thirty seconds to dispense, resulting in little impact on your staff. The company pre-packages all prescriptions before they are shipped to the clinic. The system provides physicians, group practices, specialty clinics and dietary facilities with double safety sealed prescription medications appropriate for direct dispensing to their patients. The medication is ready to be dispensed as soon as the clinic receives the shipment.

Earn More Money Without Seeing Additional Patients
   When you participate in the in-office physician dispensing program, you can channel therapeutic, financial and administrative challenges into one profitable care-centered office program. You can choose from 2,500 pharmacy products.

State Regulation
   Each state has its own regulations in relation to in-office dispensing. Check with the provider of the program regarding what your rules and regulations will be.

Basic Requirement of the Practice
   All that is required of your clinic is a locked cabinet or drawer. If you plan to carry controlled medications, they must be stored behind a double lock. Since the company seals all of its medications in a prescription-ready format, it assumes all the liability for the medications in case of recalls. You carry the same liability that you would if you were to write a prescription.
   One might ask why every physician doesn’t take advantage of programs like these. It seems like a no brainer. That is a very good question, but the answer lies in the physician’s leadership and his ability to embrace the new attitude of taking charge of his future. My challenge to all physicians is to take charge in 2007; after all, it is your business.
   What opportunities come next? Tomorrow these programs will come from the imagination of the physicians and entrepreneurs who have their finger on the pulse of the practice and can design new programs and navigate the regulatory world. Who knows, maybe you have that idea right now.
   Act on it.

Andy Guion started in the orthopaedic industry in 1980 as a sales associate and later became a distributor for a major orthopaedic products company. He is the founder of Strategic Orthopaedic Solutions, now know as BottomLine Medical, Inc., a provider of ancillary income programs for medical practices. He can be reached at andy@bottomlinemedical.com.


References
1. American Medical Association. Issued June 2002. This opinion is a consolidation of previous Opinions 6.04, “Fee Splitting:Drug or Device Prescription Rebates;” 8.06, “Drugs and Devices: Prescribing;” and 8.07, “Gifts to Physicians:Offers of Indemnity.” www.amaassn. org/ama/pub/category/8483.html.
2. National Association of Chain Drug Stores, “Ask Your Pharmacist about Your Prescriptions… And Get the Answers.” www.nacds.org/wmspage.cfm?parm1=2626