June 19, 2025 • 36 mins
The healthcare landscape is transforming at lightning speed, with consolidation reshaping how orthopaedic care is delivered across America. In this eye-opening conversation, Dr. David Jevsevar, CEO of OrthoVirginia, shares his unique perspective gained from navigating nearly every side of this complex equation—from private practice founder to hospital executive to leader of one of the nation's premier orthopaedic mega groups.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 2 (00:21):
Welcome to the AOA Future in Orthopedic Surgery
podcast series.
This AOA podcast series willfocus on the future in
orthopedic surgery and theimpact on leaders in our
profession.
These podcasts will focus onthe vast spectrum of change that
will occur as the futurereveals itself.
We will consider changes asthey occur in the domains of
(00:41):
culture, employment, technology,scope of practice, compensation
and other areas.
My name is Doug Lundy, host forthe podcast series.
Joining us today is Dr DavidJevsevar.
Dr Jevsevar attended St VincentCollege for his undergraduate
education and got his medicaldegree from Georgetown
University School of Medicine.
(01:02):
He completed his generalsurgery internship at the Mercy
Hospital of Pittsburgh and thena research fellowship at MIT,
followed by his orthopedicsurgery residency at the Tufts
affiliated orthopedic residencyand Allegheny General Hospital.
Dr Jez Savar also has hisMaster of Business
Administration from AuburnUniversity.
He served in the Air Force andgot out after serving as a major
(01:26):
in the Air Force and thenstarted a successful private
practice which he subsequentlysold to Intermountain Healthcare
and became the director oftheir orthopedic clinical
program.
He then became the chair atDartmouth Hitchcock for many
years as an orthopedic surgeonthere and then after that became
the chief executive officer ofOrthoVirginia.
(01:48):
So, dr Jessavar, welcome to thepodcast series, sir.
Speaker 3 (01:52):
Doug, thanks for having me.
It's great to talk to you.
Speaker 2 (01:55):
You and I have had a somewhat similar career.
I would say that your careerhas been absolutely outstanding.
You've had quite a bit ofachievement and done some really
cool things.
Really appreciate all yourservice to the country and the
other things that you've donefor our profession.
And today we're going to talkabout the effective market
consolidation which you spoke atabout at the AOA meeting last
(02:18):
year.
Speaker 3 (02:20):
I think it's an important and critical topic,
and one that I think most of us,as orthopedic surgeons, don't
recognize its importance in ourcurrent healthcare ecosystem.
Speaker 2 (02:31):
Can you just overall tell us what your thoughts about
?
What is market consolidationand why should we care about it?
Speaker 3 (02:38):
Well, in the old world, when you and I started
and you could start a practiceand you could be easily a group
of three or four surgeons, thesystem really didn't make that
much of a difference.
And this all happened around theturn of the century and with
some well-meaning legislationlike the ACA.
(02:59):
But all of the legislationactually accelerated this
concept of consolidation.
The legislation actuallyaccelerated this concept of
consolidation.
So first we started seeingconsolidation amongst the payers
and now, as we know, we're tofour or five big healthcare
insurance payers and you knowthey're making unbelievable
profits and their consolidationhave significant impact on the
healthcare system.
(03:19):
And so hospitals and healthsystems I think with the concern
with the ACA about creatingaccountable care, organizations
felt the need to consolidate tomake sure that they had a large
private practice base to ensurethat they had patients coming to
their facility.
Once that occurred, then itbecame paramount that we had to
drive the procedures that occurwithin hospitals and health care
(03:41):
systems.
So proceduralists andspecialists like orthopedic
surgeons and all of oursubspecialties were obviously
hired in droves by thoseorganizations.
I think, to counter that and tobe competitive within the
market, groups like Resurgence,which used to be part of, and
OrthoVirginia, which I'm nowpart of, have felt the need to
grow, to be able to maintain themass and the heft to be able to
(04:05):
compete within a robustmusculoskeletal healthcare
system.
Speaker 2 (04:09):
Yeah, there's a lot of that going on.
There's a whole lot wrapped upin what you just talked about,
and I cannot help but think thatthis has got to be a front
burner issue for many orthopedicsurgeons, and if they're not
thinking about it, they shouldbe thinking about it.
So there's some terms I like tounwrap here.
Can you tell us, like, what'sthe difference between vertical
(04:31):
integration, hospitalintegration, non-traditional
integration?
How does that all work together?
Speaker 3 (04:38):
Sure.
So I think Kaiser is in ourworld.
Kaiser is probably the bestexample of a vertically
integrated system.
Intermountain Healthcare, whichI used to work for, is another
example of a verticallyintegrated health system.
So in a vertically integratedsystem the system has basically
every component of what weconsider healthcare.
(04:58):
So that includes the payer.
So Kaiser has its own insuranceplan.
Intermountain has its owninsurance plan.
That includes the facility, sohospitals, ambulatory settings,
imaging, all the rest, all theancillary types of things that
are out there.
And then it also includes theclinicians, of which we, as
orthopedic surgeons, are one ofthem.
So that's an example of avertically integrated health
system.
(05:19):
It can include home health.
It can include in those systems.
It does include everything.
Horizontally integrated systemstend to be a little bit
different and the best examplesthere are the big hospital
systems.
Maybe Advocate essentiallywould be one example of a
horizontally integrated healthsystem where they continue to
(05:41):
scoop up hospitals.
So they continue to kind ofstay in their lane with the
hospital and healthcare setting,maybe clinicians as well, but
they don't go through the wholepayer aspect of things at least
not now, and they stay out ofsome areas of business.
So they tend to consolidate inareas where they already have
strength.
Speaker 2 (05:59):
Okay, how about non-traditional?
Speaker 3 (06:01):
Non-traditional integration, the types of things
that we see with CVS or Amazonor other folks who traditionally
are not in the healthcare spacebut are suddenly becoming
players within the healthcarespace.
So with CVS, it's the purchaseof one medical and trying to
scale up.
Or Amazon's purchase of onemedical, trying to scale up all
(06:24):
of those types of entities.
So it's non-traditionalparticipants into the healthcare
system but are also havesignificant ability to have
scale because they have largeamounts of cash to be able to
purchase and integrate thesesystems.
Speaker 2 (06:38):
And you talked a little bit of why orthopedic
surgeons are opting forconsolidation.
Can you get a little bit moreinto thatopedic surgeons are
opting for consolidation.
Can you get a little bit moreinto that?
And then also the AffordableCare Act had some unforeseen
consequences that kind of droveus toward that.
Your thoughts.
Speaker 3 (06:54):
Exactly, I don't think.
As I said, I don't think it wasthe intent of the Affordable
Care Act and some of thelegislation previous to that
that you know.
Mandated electronic healthrecords also was an example that
, forced because of the cost ofimplementing EHRs, also forced
some greater consolidationacross organizations.
The ACA again had a similarimpact because when the thought
(07:17):
with the ACA is we would bemoving largely towards
accountable care organizations,again, hospitals and health
systems really were concernedthat they needed to have scale
to be able to ensure that theycould manage a large area of
primarily primary care practicesso that they could meet all the
tenants that were part of theoriginal ACA and accountable
(07:40):
care organizations.
Orthopedic practices felt theneed, I think, to keep up with
that.
So orthopedic surgeons had oneof a couple choices and some of
those choices have changed alittle bit with time.
If you were in a smaller groupand you were in a market that
had a dominant hospital orhealthcare systems, for many of
our practice colleagues it wasjust easier to sell their
(08:01):
practice or become part of thehospital or healthcare system.
They didn't have the financialwherewithal to be able to do a
lot of this on their own.
For some others of us, we wereable to consolidate groups and
we were able to create what wewould call now these larger mega
groups, and for a group likeours, that's 170 physicians but
there are groups out there thatare even bigger, but I would say
(08:22):
any group over the age of overthe number of 50 is a mega group
or a big group.
And now private equity, as youknow, has come into the space as
well and it's also trying toconsolidate and take what's a
fragmented system still within,especially, orthopedic practices
and consolidate amongst those.
So that's what we're seeingoccur in the market.
(08:43):
If you look at the last censusthat the Academy did which was
way back in 2018, basically itflipped over 10 years.
So in 10 years it went fromapproximately 65 to 70% of
orthopedic surgeons being insome form of private practice to
now 60 to 70% of orthopedicsurgeons being in some type of
employee practice if you want tocall private equity and
(09:05):
employee practice as well.
Speaker 2 (09:07):
Okay, and to some degree I think we talked about
PPACA, but to some degree alsothe push for MIPS and APM
participation also kind of alsodrives smaller practices into
consolidation, don't you think?
I mean, how are y'all involvedin that at OrthoVirginia?
Speaker 3 (09:27):
Absolutely it does, because you have to be able to
consolidate and you have to beable to measure, and in the
smaller practice you only have acouple options for being able
to do that and most of thesmaller practices can't afford
to have a full-time qualityperson that's working through
the standardization andmeasurement of the outcomes that
are required for whether it'sMIPS, a new MVP or whatever.
(09:48):
When you get to be a scale ofsomething like OrthoVirginia, we
do have the ability to be ableto manage those internally and
we're able to hardwire a lot ofthat within our organization to
make sure that we are meetingour quality goals and we are
hitting the outcome points thatwe need to make sure that we're
competitive and that we're notlosing money within this space.
Speaker 2 (10:08):
So I can hear a lot of my old friends, current
friends in private practiceyelling and screaming the whole
way into this.
They know what, my friends?
They don't want to give uptheir autonomy.
They'd much rather go into amega group like OrthoVirginia
than they would.
Just historically, they wouldtell me them them be hospital
employed or something like that.
But they do see theseadvantages that you've laid out.
(10:29):
But there are also certaindisadvantages.
Right, there are, I think, thephysicians themselves.
I mean, we can get to thecommunity a minute, but just the
physicians themselves.
What?
What are some of thedisadvantages?
Speaker 3 (10:39):
absolutely.
I think, regardless of practicesetting from when you and I
started Doug to now, loss ofautonomy is real.
It's real even in a practicelike OrthoVirginia.
I think our physicians havemore autonomy than most
orthopedic surgeons that are outthere today, because now we are
(11:02):
larger and that puts all of theshareholders of OrthoVirginia
at risk.
So whereas when you may havebeen in a small practice, it was
maybe just you at risk or maybeone or two other partners at
risk, now we have potentially170 partners at risk, so we have
to manage that, and managingthat means that there's some
loss of autonomy with that.
The other aspect of that isthat physicians feel especially
orthopedic surgeons that camefrom smaller practices feel
(11:25):
displaced from decision-makingthat impacts them.
So the other hard part with alarge group like ours is how to
make sure that our members feelthat they're participating in
what's happening within theorganization and that their
voice is being heard.
Again I think they haveproportionate to or relative to
other aspects that are out thereemployee physicians or academic
(11:47):
physicians.
I think they have moreopportunity to participate, more
opportunity to be heard, butagain, it's less than it was 20
years ago.
Speaker 2 (11:55):
What's the impact of consolidation on, say,
innovation, research, thingslike that?
Speaker 3 (12:01):
Well, I think we all see it in the various aspects of
what we do.
If you're part of an academichealth system and when I was at
Dartmouth, dartmouth is a greatplace, but even over the years
that I was there, the emphasishad to change to become a little
bit more about productivity,and whenever that emphasis
changed to productivity, thattook away from other academic
(12:22):
pursuits such as funding ofresearch or how to always meet
our academic mission to thehighest level.
I think that occurs withinemployed physicians that are not
in academic systems as well.
Maybe they were doing thingsinnovatively in their practice
or they were involved withresearch or industry-sponsored
research, and many of them nowhave such stringent conflict of
(12:46):
interest rules that they can'tbe involved in any of those
types of initiatives.
And one of the hallmarks oforthopedic surgery has been
innovation.
That has driven a lot of theresearch that we have.
So those things have gone awayquite a bit and again at a
practice like OrthoVirginiawe've introduced a robust
research infrastructure, butagain it costs money to do that
(13:08):
and our shareholders pay forthat at one level or another.
So you know we at least want tobreak even doing our research,
but that's not always an easyendeavor.
Speaker 2 (13:17):
Now, speaking of OrthoVirginia, Resurgence Mile
Group, emerge, orthocarolina,rothman, places like that we
have the orthopedic mega groupright and uh, my friends at
ortho forum, which I was a veryproud member of when I was at
resurgence, uh told me at thetime, about a year ago or so,
there were 12 independentorthopedic mega groups in the U
(13:40):
S.
There may be more now,certainly.
I think a lot of these havebeen formed because of the
pressures of consolidation.
How do you see the benefits ofthe mega group or some of the
detractors per se?
Speaking fairly, you are CEO ofone of them and I was president
of one of them, but what do youthink?
Speaker 3 (13:59):
I think that to be able to compete effectively,
like you, I get to travel aroundthe country, I get to meet lots
of folks and there are markets.
There are some markets thatstill have a number of really
what I would call really smallgroups of people, that are still
practices of four to six, butnationally, to be able to
compete in the big picture,we're not supposed to talk about
things like leverage, becausethat doesn't add value to the
(14:21):
health care system.
But for me to be able toleverage what's happening at
OrthoVirginia with our payers orwith hospitals and health
systems, I need the size, I needthe breadth, I need the depth
of everything that we do andeverything that we have to be
able to compete effectivelywithin our market because our
competitors have that.
So I think all of the practicesthat are out there see that and
(14:42):
they've grown to meet what theyneed to meet within the market
to be able to maintaincompetition, to be able to
provide the good services andexcellent patient care that they
would like to provide.
I think one of the things thatthe mega groups are pretty good
with is making sure that we'remeeting our patient needs.
We're meeting our patient needs.
(15:05):
For us it's really, reallyimportant, because we may not
have the brand names of someother academic institutions
across the country or in somehospitals or healthcare systems
that may have deeper pockets.
So I do think that we try toprovide patient experiences that
are superior.
I do think that most of us youknow, at OrthoVirginia we can
see any patient any day.
We have same-day appointmentsevery day for anybody that wants
to be seen.
I think those types ofinitiatives and patient
(15:25):
experience and patient careinitiatives are the things that
really allow the mega groups tostand apart.
Speaker 2 (15:32):
Right, right.
So overall, in terms of theentire consolidation matrix,
which I mean the hospitals arenot innocent either, right?
I mean, do you want to talk alittle bit about hospital
consolidation?
You and I have seen atremendous amount of that in our
careers.
Speaker 3 (15:46):
Yeah, hospital consolidation has been obviously
what's driven a lot of thechanges in healthcare over the
last 30 years.
I think the problem is or atleast I believe, and this
happened at the end of the Trumpadministration was the
elimination of the inpatientonly list.
It was reinstated, obviously,under President Biden, but I
(16:07):
think that the writing's on thewall for the inpatient only list
.
It's only a matter of timebefore the inpatient only list
goes away.
I think hospitals and healthsystems are incredibly worried
right now.
Even if you just look at what Ido as a hip and knee surgeon,
with total hip and total kneeand now total shoulder, moving
from the inpatient only list,hospitals have lost a
significant amount of revenue.
(16:27):
I can tell you, Doug and it'snot anything that I can't
disclose, I have two largehealthcare systems right now
that employ well over a hundredorthopedic physicians each who
are interested in divestingthemselves of those orthopedic
physicians because they'reworried about the financial
impact of everything that'shappening in the healthcare
ecosystem.
(16:48):
They tell me that they'resubsidizing each orthopedic
surgeon within their systembetween $200,000 and $300,000
each and they're subsidizingspine surgeons upwards of
$500,000 or $600,000.
I think, if you look back atyour time in resurgence and I
look at my time in NorthVirginia.
That kind of makes sense,because where we gain traction
and where we have the ability togenerate revenue for our
(17:10):
physicians is through ourability to have ancillaries, and
so the hospitals and healthcaresystems when they hire
physicians, the physicians manytimes there are physicians who
have joint venture ASCs and thelike still, but many of them
don't have that in place.
So there is some subsidy thathas been applied to orthopedic
physician compensation acrossthe country and the employed
(17:30):
physician model, and so I seelittle cracks happening right
now and certainly if the FTCdoes enact the policy to get rid
of non-competes, at least forthe for-profit hospitals and
healthcare systems, I thinkyou'll see significant
disintegration of the employedorthopedic surgeon model.
Speaker 2 (17:49):
Right, yeah, that's pretty impressive.
I didn't know that.
So in terms of the public, thenokay.
So now let's make you secretaryof HHS or director of CMS and
you're kind of responsible forthe musculoskeletal care of the
nation.
What are the bad parts aboutconsolidation that make your job
more difficult?
(18:09):
What's what's not in it for thepatient?
As we we talked about thepositive things about
consolidation for patients, butwhat's what's some of the bad
stuff for patients in terms ofconsolidation?
This is no way critical ofOrthoVirginia or anything else?
It's just just to make sure theway it is.
Speaker 3 (18:24):
You know that I made the move to do what I'm doing
now at OrthoVirginia because Ireally believe in the concept of
a value-driven musculoskeletalhealthcare and I've moved past
orthopedic-only healthcare tomusculoskeletal healthcare
because I think it my naivety.
When I started this journey 25or 30 years ago, my goal was
(18:45):
honestly to get every dollar ofthe waste of money within our
health system back to ourpatients.
I think I realistically now, orpragmatically, don't think that
that's ever going to happen.
I hope to be able to containthe increase of cost, but I
don't think it's going to goback to patients.
I just don't think our system'sgoing to go back to patients.
I just don't think our systemis designed to allow that to
(19:06):
happen.
I think that the problem rightnow is that any of that excess
value that occurs within thehealth system, so much of it's
going to payers and, at least inDave's naive view of the world,
if there's excess value withinthe system, it should be going
either to frontline folks likeorthopedic surgeons or it should
be going to hospitals andhealthcare systems that provide
(19:27):
that care.
And so if, as I look atconsolidation because
consolidation has occurred sorampantly on the payer side
we're all scaling up tobasically achieve the same thing
.
So we felt under leveraged whenthe payers got really big and
now we're over leveragingbecause we want to exert that
leverage.
However, we can exert that,whether that's on block time at
(19:50):
the hospitals and healthcaresystems that we work with.
Where I'm really trying tofocus and hopefully this is a
positive, not a negative is I'mreally trying to focus on
creating more value-basedincentive opportunities where we
manage the upside and thedownside of patient care, at
(20:12):
least in the musculoskeletalpopulation.
So I wish that CMS and Healthand Human Services would focus a
little bit more on somepragmatic approaches to not only
having hospitals and healthcaresystems manage risk but
allowing other parties, like bigpractices like ours, help to
manage that risk for the future,because otherwise we continue
(20:35):
just this rollercoaster ride tothe bottom.
Speaker 2 (20:38):
I hear your MBA speaking there and that what
you're let me re paraphrase whatyou're saying.
See, if you agree with this isthat for ortho Virginia
specifically, you're positioningortho Virginia for the longterm
value-based plate, where you'rea relevant I hate to use the
word provider, but provider oforthopedic musculoskeletal
services for the Virginia area,rather than seize every dollar
(21:01):
while you can.
Speaker 3 (21:02):
So it's got to be the long-term play.
I know that we as physicians wefeel victimized in many ways I
don't know how else to put itbut I think we all worry about
the short term, but I think thatthe big play in musculoskeletal
health is the long-term play.
I do think that value-basedcare is better.
You know and I look at, I thinkthere's some downsides to being
(21:29):
a large group, but one of theupsides are for me and our value
based contracts.
My physicians, my surgeons willmake between 25 percent and 400
percent more for doing the sameamount of work.
If we manage the risk and wemanage patients appropriately,
that puts the risk on us.
We could lose money too, but wehaven't.
We don't.
We've managed that risk.
We think relatively effectivelyand we get and we are getting
(21:50):
patients out of the higherhealthcare cost settings.
I know hospitals don't want tohear that, but there are always
going to be a subset of ourpatients that need to be cared
for in hospitals.
I want to maximize what we dowith our hospitals and
healthcare partners, but I thinkfor everything else we need to
get it out of the hospital.
I think for everything else weneed to get it out of the
hospital.
I think in orthopedics we'veproven that to be the case.
It doesn't have to be all atortho Virginia facilities, but
(22:14):
in lieu of anything elsehappening, we create our own
facilities because nobody elseis doing it.
Speaker 2 (22:20):
Very good, now, that's good.
I appreciate that, regardlessof who wins the election four
years from now, where do you seethe effect of consolidation
over the next five years or soin terms of the orthopedic space
, and then, if you're so bold,even past that?
Speaker 3 (22:41):
So I probably have some different views on this
than most other folks that areout there.
Obviously, to date, as you'rewell aware, in your previous
position with Macademy ourgovernment has largely stayed
silent on the consolidationthat's occurred within
healthcare.
I think that probably and Iread articles from legal
(23:03):
scholars who think that therewere plenty of opportunities for
the government to win and someof the things that have happened
I think those ships have sailedand we are where we are, so
consolidation is a real thing, Ithink.
For me it's.
The interesting thing is goingto be, as I kind of alluded to
earlier, what's going to happenwith employed physicians, not
just orthopedic surgeons, butemployed specialists within
(23:23):
hospitals and healthcare systems.
It's not that I see a massexodus coming, but I see people
leaving if those non-competesare abrogated, or physicians
looking for other opportunitiesout there.
So I think that that's going tocreate in my world.
It's going to make the biggergroups even bigger, because I
(23:45):
think that if people are leavingin that employed status, it's
not practical in today's worldthat you can take out a loan and
start your own practice anymore, so you're going to need to
have huge access to resources tobe able to establish new
practices.
So I see further consolidationin our world.
On the private equity front, Ithink, as you're aware, it's
been interesting there's been alot of private equity events
(24:07):
happening within orthopedics,but this whole concept of the
second bite of the apple hasbeen a little bit elusive in
these orthopedic platforms.
So I'm not as high on private.
I have nothing against privateequity, I think it's just a
business model.
But I'm not as high on thatconceptually for the future as
some others.
But on the other hand, thosefolks have huge access to
(24:28):
capital and maybe, since theyhave that access to capital,
it's always going to be that way.
I don't see, with any of thepolitical changes occurring in
the near term, any changesoccurring with the bukas, the
big healthcare payers.
They're going to continue togrow and become even bigger.
I suspect, and I still suspect,the hospitals and healthcare
systems are going to continue toenlarge as it makes sense for
(24:48):
them to do so.
Speaker 2 (24:50):
Wow, that brings up a bunch of questions, and I have
nothing against private equityeither, but there is a different
flavor, I think, between NorthVirginia and a orthopedic mega
group that was acquired byprivate equity in terms of the
(25:10):
very basis of it, right, becausey'all remain totally, 100% in
sovereign control of yourdestiny and, to your point, your
value programs and things likethat, what's important to y'all,
right?
Speaker 3 (25:21):
Correct.
I think that, as I always talkto my shareholders or physicians
around the country, as I alwaystalk to my shareholders or
physicians around the country.
private equity has exposed anopportunity to sell your
autonomy and control, butbasically you're giving up more
autonomy, more control, fordollars, and you and I both have
heard every private equitypresentation that we're not
(25:41):
going to have any impact onclinical care.
By definition, you have to havesome impact on clinical care
because if you're going to take30% of, or whatever that number
is of, any physician's incomeand apply it, that physician has
to do something to make up thatdifference.
So that's either got to be inthe resources that you're
utilizing or your efficiency andproductivity have to change
(26:04):
significantly.
So it's interesting.
It's going to be interesting tosee what happens, I think, with
OrthoVirginia.
I believe we function basicallyas a managed services
organization and if folks andpractices want to be part of
OrthoVirginia and we're alwaysin a robust kind of merger and
acquisition phase you come in asan equal partner.
(26:25):
Or if you don't want to be anequal partner, we can just
provide the services that arereally expensive services and
we're able to provide thembecause we can have some
economies of scale in the waythat we provide them.
So you can just buy servicesfrom us.
You don't have to become partof ortho virginia, if you don't
want to be right.
Speaker 2 (26:40):
Uh, I would be willing to bet you and I've
never talked about this, but I'dbe willing to bet that y'all
have stayed very clear of anyFTC stuff that your risks of an
antitrust lawsuit are probablyextremely low.
Yet you continue to havemergers and acquisitions across
the state and functionally yeah,I wouldn't use the monopoly
(27:03):
word but y'all become a largerand larger force, while never
really getting on the radarscreen of the FTC right.
Speaker 3 (27:12):
Well, I think, if you look at it, even though we try
to do our best to create goodcontracting with our payers, if
we do it in a value-basedapproach, which really we are
trying to decrease the overallcost of care, we're just trying
to wrestle some of that moneyaway from our payers.
As we're doing it, we'recareful about the numbers of
(27:34):
physicians we have, about themarkets that we're in, and we
have 38 offices across the state.
We'll have more probably by theend of the year and I think in
three out of the four marketsthat we're in we are probably
the largest player.
But I think we provide greataccess, we provide great patient
experience and we still providethe lowest cost of care in
(27:55):
every one of our regions.
So I think that's hard foranybody to look at and say that
this is not achieving the aim ofwhat we're trying to accomplish
within health care right, Ithink when, I was I wasn't
explaining myself for a while.
Speaker 2 (28:07):
I think, like where I live, there's functionally two
hospital systems and that's it.
There's one smaller privatepractice group, but everybody
else has either been acquired,quit, shut down, joined,
whatever.
And I would go as far to saythat neither hospital system has
been excessively predatory oranything that would look like
antitrust.
(28:28):
It just was a nature of thebeast, of the way that things go
, and I think that y'all, y'allare probably experiencing the
same thing that, through goodintent, you more or lesser being
able to merge and acquire thatwill.
Speaker 3 (28:43):
That.
That's our goal at least, andwe take seriously I take
seriously our work, ourcollaboration with the hospitals
and health care systems that wework with.
We certainly try to take careof the needs of our community.
We see all players.
You know sometimes privatepractices get this hit that all
they want to see are thewell-insured patients.
(29:04):
We see everybody.
Our rate of federal payers isthe same as everybody else
within our state.
So we're doing our share, Ithink, on all fronts, and
frankly I think and I've talkedto our Secretary of Health and
Human Services here in VirginiaI think we can provide better
and cheaper care, for example,to Medicaid patients within the
state, but the state justdoesn't have the wherewithal to
(29:27):
pull that trigger.
Speaker 2 (29:29):
And I'm very familiar with your practice and I would
fully support everything yousaid there In terms of, say, the
things like bundles, otherthings that are coming up that
we always hear forever, andother value-based programs for
orthopedic surgery and othermusculoskeletal services.
(29:50):
You got to think thatconsolidated groups are going to
be better able to negotiate andactually pull these contracts
off, as opposed to smallergroups, where that would just
the lift on that just way tooheavy.
Speaker 3 (30:04):
So the further down this, this pathway of value, we
go, the more expensive itbecomes to develop your approach
to it.
So the procedure-based bundlesare one thing.
We all have procedure-basedbundles.
We may have centers ofexcellence, which are a
different kind ofprocedure-based bundle.
Basically and I think most ofus even small practices can
probably relatively effectivelymanage the procedure-based
(30:28):
bundles.
As the work of Kevin Bozic andthe folks at Duke start to look
at condition-based bundles, itbecomes a little bit more
complex, because you have tothen take into account, if I see
somebody with a diagnosis ofknee osteoarthritis and I'm
going to be paid X number ofdollars per month to take care
of that patient, what happenswhen that patient goes to their
(30:48):
primary care physician or doesthis or does that.
So there's a lot morecoordination of care.
And then if you look at whereI'm trying to get with
OrthoVirginia, which is to jumpover the condition-based bundles
to basically subcapitation formusculoskeletal health, what I
would like is our big payers tosay okay, OrthoVirginia, for
non-emergent care, we're goingto pay you per member per month
(31:15):
for our population of patients.
You manage them.
If you want to give them alllow value care, that's your
dollars that you're spending onthose patients.
If you want to provide themwith high value care and you can
save money doing that, thenwhatever you're saving goes to
you.
But that requires it doesrequire people and it does
require an expense to be able tomake sure that you're managing
this thing, managing theseaspects effectively.
(31:36):
You have to have actuaries, youhave to have lots of different
aspects of this that we, asorthopedic surgeons, haven't
historically thought about.
Speaker 2 (31:44):
Yeah.
But to and to your point,though if you're doing these
condition-based bundles or thesubcapitated plans on that,
you've got to be consolidated tohave all the required people,
cause if you have nothing butorthopedic surgeons, you can't
do this.
You have to have other types ofhealthcare providers and
physicians within your, yournetwork, within your group that
(32:04):
can can deliver this lower cost,highly effective care, high
value care to the patients, forthe patients who don't need
expensive surgery.
But that requires consolidation.
Speaker 3 (32:15):
My surgeons are probably tired of hearing this.
If the next hundred physicianswe hired orthopedic surgeon, I
would hire non-surgeons for thenext hundred physicians.
We just need to continue toincrease the breadth of the
funnel.
The hard part is our models fora practice like OrthoVirginia
was built around orthopedicsurgeons.
So translating a shareholdermodel where people own part of
(32:37):
the company, and translatingthat to things like primary care
, sports medicine orrheumatology or PM&R or pain
medicine all of those thingsbecome a little bit more
challenging.
That's what we're workingthrough and I think we're
relatively effective at doing it.
But those are the challengesthat we have to work within to
make sure that we can create asystem where we're able to
(32:59):
provide all aspects of care.
If it was up to Dave Jezevar,my surgeon would not see Dougie,
your trauma surgeon.
So maybe a little bit different.
But me, as an arthroplastysurgeon, I wouldn't see a
patient unless that patient wasa surgical candidate.
I think that all the rest ofthe care should occur way
downstream, at lower cost carelower than my expense or your
expense and that we should besurgeons and living to the
(33:22):
highest level of our licensure,which I think is clinical
decision-making in surgery.
Speaker 2 (33:32):
And in a very efficient consolidated platform
those patients would beimmediately directed to the most
valued part of the organizationas possible so they could get
the best care at that levelrather than, to your point, the
more expensive folks which areyou and I, Correct, yeah, now
you've had an interesting career.
After the air force you were inintermountain in utah while you
you in your own practice thatyou sold to internet in utah you
(33:53):
were at dartmouth and I knowy'all were.
When you were at dartmouthy'all were looking at acquiring
different places there and nowat ortho, virginia.
So your entire career has beenone way shape or the other
involved with the consolidationkind of effort, anything, any
pearls or wisdom that you'veacquired from this multifaceted,
different viewpoints ofconsolidation.
Speaker 3 (34:16):
I think that the biggest thing, and probably
what's driven me down thepathway that I've gone, is that
we, as physicians, need to beinvolved in everything that's
happening.
Not all of us want to take thetime to do it, but then if
that's the case that you believethe physician should be
involved in leadership but youdon't want to do it then we have
(34:37):
to devise payment models forour leaders within our specialty
so that they're able to leadwithin all the organizations
that we're in.
And I think that what I've seenis, if we're not able to have
effective leadership, we're notable to have effective business
skills, we're not able todevelop effective quality
programs.
All of these things areintegrated.
(34:58):
If we're not able to do thatand frankly it's expensive to do
that that one of the only waysthat we're able to get there is
with consolidation, whetherthat's in a healthcare system
that has a lot of resources,potentially, or if it's within a
practice like OrthoVirginia,which I call a musculoskeletal
healthcare system.
We have everything about ahospital, everything else we
have within our system.
(35:18):
I think that's the type ofmodel that will work the best
for now, and probably at leastinto the next five to 10 years,
to be successful within theorthopedic and musculoskeletal
arena.
Speaker 2 (35:29):
This has been an absolutely fascinating
discussion.
I really appreciate you talkingwith us about this and look
forward to seeing you again, andDavid, and thank you for your
time so far on this AOA podcast.
Speaker 3 (35:41):
Thanks, doug, I appreciate it.
It was great talking to you, asalways.
Speaker 2 (35:44):
Yes, sir, and y'all look forward to future AOA
podcasts on the future inorthopedic surgery.
Thank, you.
Welcome to the AOA Future in Orthopedic Surgery
podcast series.
This AOA podcast series willfocus on the future in
orthopedic surgery and theimpact on leaders in our
profession.
These podcasts will focus onthe vast spectrum of change that
will occur as the futurereveals itself.
We will consider changes asthey occur in the domains of
(00:41):
culture, employment, technology,scope of practice, compensation
and other areas.
My name is Doug Lundy, host forthe podcast series.
Joining us today is Dr DavidJevsevar.
Dr Jevsevar attended St VincentCollege for his undergraduate
education and got his medicaldegree from Georgetown
University School of Medicine.
(01:02):
He completed his generalsurgery internship at the Mercy
Hospital of Pittsburgh and thena research fellowship at MIT,
followed by his orthopedicsurgery residency at the Tufts
affiliated orthopedic residencyand Allegheny General Hospital.
Dr Jez Savar also has hisMaster of Business
Administration from AuburnUniversity.
He served in the Air Force andgot out after serving as a major
(01:26):
in the Air Force and thenstarted a successful private
practice which he subsequentlysold to Intermountain Healthcare
and became the director oftheir orthopedic clinical
program.
He then became the chair atDartmouth Hitchcock for many
years as an orthopedic surgeonthere and then after that became
the chief executive officer ofOrthoVirginia.
(01:48):
So, dr Jessavar, welcome to thepodcast series, sir.
Speaker 3 (01:52):
Doug, thanks for having me.
It's great to talk to you.
Speaker 2 (01:55):
You and I have had a somewhat similar career.
I would say that your careerhas been absolutely outstanding.
You've had quite a bit ofachievement and done some really
cool things.
Really appreciate all yourservice to the country and the
other things that you've donefor our profession.
And today we're going to talkabout the effective market
consolidation which you spoke atabout at the AOA meeting last
(02:18):
year.
Speaker 3 (02:20):
I think it's an important and critical topic,
and one that I think most of us,as orthopedic surgeons, don't
recognize its importance in ourcurrent healthcare ecosystem.
Speaker 2 (02:31):
Can you just overall tell us what your thoughts about
?
What is market consolidationand why should we care about it?
Speaker 3 (02:38):
Well, in the old world, when you and I started
and you could start a practiceand you could be easily a group
of three or four surgeons, thesystem really didn't make that
much of a difference.
And this all happened around theturn of the century and with
some well-meaning legislationlike the ACA.
(02:59):
But all of the legislationactually accelerated this
concept of consolidation.
The legislation actuallyaccelerated this concept of
consolidation.
So first we started seeingconsolidation amongst the payers
and now, as we know, we're tofour or five big healthcare
insurance payers and you knowthey're making unbelievable
profits and their consolidationhave significant impact on the
healthcare system.
(03:19):
And so hospitals and healthsystems I think with the concern
with the ACA about creatingaccountable care, organizations
felt the need to consolidate tomake sure that they had a large
private practice base to ensurethat they had patients coming to
their facility.
Once that occurred, then itbecame paramount that we had to
drive the procedures that occurwithin hospitals and health care
(03:41):
systems.
So proceduralists andspecialists like orthopedic
surgeons and all of oursubspecialties were obviously
hired in droves by thoseorganizations.
I think, to counter that and tobe competitive within the
market, groups like Resurgence,which used to be part of, and
OrthoVirginia, which I'm nowpart of, have felt the need to
grow, to be able to maintain themass and the heft to be able to
(04:05):
compete within a robustmusculoskeletal healthcare
system.
Speaker 2 (04:09):
Yeah, there's a lot of that going on.
There's a whole lot wrapped upin what you just talked about,
and I cannot help but think thatthis has got to be a front
burner issue for many orthopedicsurgeons, and if they're not
thinking about it, they shouldbe thinking about it.
So there's some terms I like tounwrap here.
Can you tell us, like, what'sthe difference between vertical
(04:31):
integration, hospitalintegration, non-traditional
integration?
How does that all work together?
Speaker 3 (04:38):
Sure.
So I think Kaiser is in ourworld.
Kaiser is probably the bestexample of a vertically
integrated system.
Intermountain Healthcare, whichI used to work for, is another
example of a verticallyintegrated health system.
So in a vertically integratedsystem the system has basically
every component of what weconsider healthcare.
(04:58):
So that includes the payer.
So Kaiser has its own insuranceplan.
Intermountain has its owninsurance plan.
That includes the facility, sohospitals, ambulatory settings,
imaging, all the rest, all theancillary types of things that
are out there.
And then it also includes theclinicians, of which we, as
orthopedic surgeons, are one ofthem.
So that's an example of avertically integrated health
system.
(05:19):
It can include home health.
It can include in those systems.
It does include everything.
Horizontally integrated systemstend to be a little bit
different and the best examplesthere are the big hospital
systems.
Maybe Advocate essentiallywould be one example of a
horizontally integrated healthsystem where they continue to
(05:41):
scoop up hospitals.
So they continue to kind ofstay in their lane with the
hospital and healthcare setting,maybe clinicians as well, but
they don't go through the wholepayer aspect of things at least
not now, and they stay out ofsome areas of business.
So they tend to consolidate inareas where they already have
strength.
Speaker 2 (05:59):
Okay, how about non-traditional?
Speaker 3 (06:01):
Non-traditional integration, the types of things
that we see with CVS or Amazonor other folks who traditionally
are not in the healthcare spacebut are suddenly becoming
players within the healthcarespace.
So with CVS, it's the purchaseof one medical and trying to
scale up.
Or Amazon's purchase of onemedical, trying to scale up all
(06:24):
of those types of entities.
So it's non-traditionalparticipants into the healthcare
system but are also havesignificant ability to have
scale because they have largeamounts of cash to be able to
purchase and integrate thesesystems.
Speaker 2 (06:38):
And you talked a little bit of why orthopedic
surgeons are opting forconsolidation.
Can you get a little bit moreinto thatopedic surgeons are
opting for consolidation.
Can you get a little bit moreinto that?
And then also the AffordableCare Act had some unforeseen
consequences that kind of droveus toward that.
Your thoughts.
Speaker 3 (06:54):
Exactly, I don't think.
As I said, I don't think it wasthe intent of the Affordable
Care Act and some of thelegislation previous to that
that you know.
Mandated electronic healthrecords also was an example that
, forced because of the cost ofimplementing EHRs, also forced
some greater consolidationacross organizations.
The ACA again had a similarimpact because when the thought
(07:17):
with the ACA is we would bemoving largely towards
accountable care organizations,again, hospitals and health
systems really were concernedthat they needed to have scale
to be able to ensure that theycould manage a large area of
primarily primary care practicesso that they could meet all the
tenants that were part of theoriginal ACA and accountable
(07:40):
care organizations.
Orthopedic practices felt theneed, I think, to keep up with
that.
So orthopedic surgeons had oneof a couple choices and some of
those choices have changed alittle bit with time.
If you were in a smaller groupand you were in a market that
had a dominant hospital orhealthcare systems, for many of
our practice colleagues it wasjust easier to sell their
(08:01):
practice or become part of thehospital or healthcare system.
They didn't have the financialwherewithal to be able to do a
lot of this on their own.
For some others of us, we wereable to consolidate groups and
we were able to create what wewould call now these larger mega
groups, and for a group likeours, that's 170 physicians but
there are groups out there thatare even bigger, but I would say
(08:22):
any group over the age of overthe number of 50 is a mega group
or a big group.
And now private equity, as youknow, has come into the space as
well and it's also trying toconsolidate and take what's a
fragmented system still within,especially, orthopedic practices
and consolidate amongst those.
So that's what we're seeingoccur in the market.
(08:43):
If you look at the last censusthat the Academy did which was
way back in 2018, basically itflipped over 10 years.
So in 10 years it went fromapproximately 65 to 70% of
orthopedic surgeons being insome form of private practice to
now 60 to 70% of orthopedicsurgeons being in some type of
employee practice if you want tocall private equity and
(09:05):
employee practice as well.
Speaker 2 (09:07):
Okay, and to some degree I think we talked about
PPACA, but to some degree alsothe push for MIPS and APM
participation also kind of alsodrives smaller practices into
consolidation, don't you think?
I mean, how are y'all involvedin that at OrthoVirginia?
Speaker 3 (09:27):
Absolutely it does, because you have to be able to
consolidate and you have to beable to measure, and in the
smaller practice you only have acouple options for being able
to do that and most of thesmaller practices can't afford
to have a full-time qualityperson that's working through
the standardization andmeasurement of the outcomes that
are required for whether it'sMIPS, a new MVP or whatever.
(09:48):
When you get to be a scale ofsomething like OrthoVirginia, we
do have the ability to be ableto manage those internally and
we're able to hardwire a lot ofthat within our organization to
make sure that we are meetingour quality goals and we are
hitting the outcome points thatwe need to make sure that we're
competitive and that we're notlosing money within this space.
Speaker 2 (10:08):
So I can hear a lot of my old friends, current
friends in private practiceyelling and screaming the whole
way into this.
They know what, my friends?
They don't want to give uptheir autonomy.
They'd much rather go into amega group like OrthoVirginia
than they would.
Just historically, they wouldtell me them them be hospital
employed or something like that.
But they do see theseadvantages that you've laid out.
(10:29):
But there are also certaindisadvantages.
Right, there are, I think, thephysicians themselves.
I mean, we can get to thecommunity a minute, but just the
physicians themselves.
What?
What are some of thedisadvantages?
Speaker 3 (10:39):
absolutely.
I think, regardless of practicesetting from when you and I
started Doug to now, loss ofautonomy is real.
It's real even in a practicelike OrthoVirginia.
I think our physicians havemore autonomy than most
orthopedic surgeons that are outthere today, because now we are
(11:02):
larger and that puts all of theshareholders of OrthoVirginia
at risk.
So whereas when you may havebeen in a small practice, it was
maybe just you at risk or maybeone or two other partners at
risk, now we have potentially170 partners at risk, so we have
to manage that, and managingthat means that there's some
loss of autonomy with that.
The other aspect of that isthat physicians feel especially
orthopedic surgeons that camefrom smaller practices feel
(11:25):
displaced from decision-makingthat impacts them.
So the other hard part with alarge group like ours is how to
make sure that our members feelthat they're participating in
what's happening within theorganization and that their
voice is being heard.
Again I think they haveproportionate to or relative to
other aspects that are out thereemployee physicians or academic
(11:47):
physicians.
I think they have moreopportunity to participate, more
opportunity to be heard, butagain, it's less than it was 20
years ago.
Speaker 2 (11:55):
What's the impact of consolidation on, say,
innovation, research, thingslike that?
Speaker 3 (12:01):
Well, I think we all see it in the various aspects of
what we do.
If you're part of an academichealth system and when I was at
Dartmouth, dartmouth is a greatplace, but even over the years
that I was there, the emphasishad to change to become a little
bit more about productivity,and whenever that emphasis
changed to productivity, thattook away from other academic
(12:22):
pursuits such as funding ofresearch or how to always meet
our academic mission to thehighest level.
I think that occurs withinemployed physicians that are not
in academic systems as well.
Maybe they were doing thingsinnovatively in their practice
or they were involved withresearch or industry-sponsored
research, and many of them nowhave such stringent conflict of
(12:46):
interest rules that they can'tbe involved in any of those
types of initiatives.
And one of the hallmarks oforthopedic surgery has been
innovation.
That has driven a lot of theresearch that we have.
So those things have gone awayquite a bit and again at a
practice like OrthoVirginiawe've introduced a robust
research infrastructure, butagain it costs money to do that
(13:08):
and our shareholders pay forthat at one level or another.
So you know we at least want tobreak even doing our research,
but that's not always an easyendeavor.
Speaker 2 (13:17):
Now, speaking of OrthoVirginia, Resurgence Mile
Group, emerge, orthocarolina,rothman, places like that we
have the orthopedic mega groupright and uh, my friends at
ortho forum, which I was a veryproud member of when I was at
resurgence, uh told me at thetime, about a year ago or so,
there were 12 independentorthopedic mega groups in the U
(13:40):
S.
There may be more now,certainly.
I think a lot of these havebeen formed because of the
pressures of consolidation.
How do you see the benefits ofthe mega group or some of the
detractors per se?
Speaking fairly, you are CEO ofone of them and I was president
of one of them, but what do youthink?
Speaker 3 (13:59):
I think that to be able to compete effectively,
like you, I get to travel aroundthe country, I get to meet lots
of folks and there are markets.
There are some markets thatstill have a number of really
what I would call really smallgroups of people, that are still
practices of four to six, butnationally, to be able to
compete in the big picture,we're not supposed to talk about
things like leverage, becausethat doesn't add value to the
(14:21):
health care system.
But for me to be able toleverage what's happening at
OrthoVirginia with our payers orwith hospitals and health
systems, I need the size, I needthe breadth, I need the depth
of everything that we do andeverything that we have to be
able to compete effectivelywithin our market because our
competitors have that.
So I think all of the practicesthat are out there see that and
(14:42):
they've grown to meet what theyneed to meet within the market
to be able to maintaincompetition, to be able to
provide the good services andexcellent patient care that they
would like to provide.
I think one of the things thatthe mega groups are pretty good
with is making sure that we'remeeting our patient needs.
We're meeting our patient needs.
(15:05):
For us it's really, reallyimportant, because we may not
have the brand names of someother academic institutions
across the country or in somehospitals or healthcare systems
that may have deeper pockets.
So I do think that we try toprovide patient experiences that
are superior.
I do think that most of us youknow, at OrthoVirginia we can
see any patient any day.
We have same-day appointmentsevery day for anybody that wants
to be seen.
I think those types ofinitiatives and patient
(15:25):
experience and patient careinitiatives are the things that
really allow the mega groups tostand apart.
Speaker 2 (15:32):
Right, right.
So overall, in terms of theentire consolidation matrix,
which I mean the hospitals arenot innocent either, right?
I mean, do you want to talk alittle bit about hospital
consolidation?
You and I have seen atremendous amount of that in our
careers.
Speaker 3 (15:46):
Yeah, hospital consolidation has been obviously
what's driven a lot of thechanges in healthcare over the
last 30 years.
I think the problem is or atleast I believe, and this
happened at the end of the Trumpadministration was the
elimination of the inpatientonly list.
It was reinstated, obviously,under President Biden, but I
(16:07):
think that the writing's on thewall for the inpatient only list
.
It's only a matter of timebefore the inpatient only list
goes away.
I think hospitals and healthsystems are incredibly worried
right now.
Even if you just look at what Ido as a hip and knee surgeon,
with total hip and total kneeand now total shoulder, moving
from the inpatient only list,hospitals have lost a
significant amount of revenue.
(16:27):
I can tell you, Doug and it'snot anything that I can't
disclose, I have two largehealthcare systems right now
that employ well over a hundredorthopedic physicians each who
are interested in divestingthemselves of those orthopedic
physicians because they'reworried about the financial
impact of everything that'shappening in the healthcare
ecosystem.
(16:48):
They tell me that they'resubsidizing each orthopedic
surgeon within their systembetween $200,000 and $300,000
each and they're subsidizingspine surgeons upwards of
$500,000 or $600,000.
I think, if you look back atyour time in resurgence and I
look at my time in NorthVirginia.
That kind of makes sense,because where we gain traction
and where we have the ability togenerate revenue for our
(17:10):
physicians is through ourability to have ancillaries, and
so the hospitals and healthcaresystems when they hire
physicians, the physicians manytimes there are physicians who
have joint venture ASCs and thelike still, but many of them
don't have that in place.
So there is some subsidy thathas been applied to orthopedic
physician compensation acrossthe country and the employed
(17:30):
physician model, and so I seelittle cracks happening right
now and certainly if the FTCdoes enact the policy to get rid
of non-competes, at least forthe for-profit hospitals and
healthcare systems, I thinkyou'll see significant
disintegration of the employedorthopedic surgeon model.
Speaker 2 (17:49):
Right, yeah, that's pretty impressive.
I didn't know that.
So in terms of the public, thenokay.
So now let's make you secretaryof HHS or director of CMS and
you're kind of responsible forthe musculoskeletal care of the
nation.
What are the bad parts aboutconsolidation that make your job
more difficult?
(18:09):
What's what's not in it for thepatient?
As we we talked about thepositive things about
consolidation for patients, butwhat's what's some of the bad
stuff for patients in terms ofconsolidation?
This is no way critical ofOrthoVirginia or anything else?
It's just just to make sure theway it is.
Speaker 3 (18:24):
You know that I made the move to do what I'm doing
now at OrthoVirginia because Ireally believe in the concept of
a value-driven musculoskeletalhealthcare and I've moved past
orthopedic-only healthcare tomusculoskeletal healthcare
because I think it my naivety.
When I started this journey 25or 30 years ago, my goal was
(18:45):
honestly to get every dollar ofthe waste of money within our
health system back to ourpatients.
I think I realistically now, orpragmatically, don't think that
that's ever going to happen.
I hope to be able to containthe increase of cost, but I
don't think it's going to goback to patients.
I just don't think our system'sgoing to go back to patients.
I just don't think our systemis designed to allow that to
(19:06):
happen.
I think that the problem rightnow is that any of that excess
value that occurs within thehealth system, so much of it's
going to payers and, at least inDave's naive view of the world,
if there's excess value withinthe system, it should be going
either to frontline folks likeorthopedic surgeons or it should
be going to hospitals andhealthcare systems that provide
(19:27):
that care.
And so if, as I look atconsolidation because
consolidation has occurred sorampantly on the payer side
we're all scaling up tobasically achieve the same thing
.
So we felt under leveraged whenthe payers got really big and
now we're over leveragingbecause we want to exert that
leverage.
However, we can exert that,whether that's on block time at
(19:50):
the hospitals and healthcaresystems that we work with.
Where I'm really trying tofocus and hopefully this is a
positive, not a negative is I'mreally trying to focus on
creating more value-basedincentive opportunities where we
manage the upside and thedownside of patient care, at
(20:12):
least in the musculoskeletalpopulation.
So I wish that CMS and Healthand Human Services would focus a
little bit more on somepragmatic approaches to not only
having hospitals and healthcaresystems manage risk but
allowing other parties, like bigpractices like ours, help to
manage that risk for the future,because otherwise we continue
(20:35):
just this rollercoaster ride tothe bottom.
Speaker 2 (20:38):
I hear your MBA speaking there and that what
you're let me re paraphrase whatyou're saying.
See, if you agree with this isthat for ortho Virginia
specifically, you're positioningortho Virginia for the longterm
value-based plate, where you'rea relevant I hate to use the
word provider, but provider oforthopedic musculoskeletal
services for the Virginia area,rather than seize every dollar
(21:01):
while you can.
Speaker 3 (21:02):
So it's got to be the long-term play.
I know that we as physicians wefeel victimized in many ways I
don't know how else to put itbut I think we all worry about
the short term, but I think thatthe big play in musculoskeletal
health is the long-term play.
I do think that value-basedcare is better.
You know and I look at, I thinkthere's some downsides to being
(21:29):
a large group, but one of theupsides are for me and our value
based contracts.
My physicians, my surgeons willmake between 25 percent and 400
percent more for doing the sameamount of work.
If we manage the risk and wemanage patients appropriately,
that puts the risk on us.
We could lose money too, but wehaven't.
We don't.
We've managed that risk.
We think relatively effectivelyand we get and we are getting
(21:50):
patients out of the higherhealthcare cost settings.
I know hospitals don't want tohear that, but there are always
going to be a subset of ourpatients that need to be cared
for in hospitals.
I want to maximize what we dowith our hospitals and
healthcare partners, but I thinkfor everything else we need to
get it out of the hospital.
I think for everything else weneed to get it out of the
hospital.
I think in orthopedics we'veproven that to be the case.
It doesn't have to be all atortho Virginia facilities, but
(22:14):
in lieu of anything elsehappening, we create our own
facilities because nobody elseis doing it.
Speaker 2 (22:20):
Very good, now, that's good.
I appreciate that, regardlessof who wins the election four
years from now, where do you seethe effect of consolidation
over the next five years or soin terms of the orthopedic space
, and then, if you're so bold,even past that?
Speaker 3 (22:41):
So I probably have some different views on this
than most other folks that areout there.
Obviously, to date, as you'rewell aware, in your previous
position with Macademy ourgovernment has largely stayed
silent on the consolidationthat's occurred within
healthcare.
I think that probably and Iread articles from legal
(23:03):
scholars who think that therewere plenty of opportunities for
the government to win and someof the things that have happened
I think those ships have sailedand we are where we are, so
consolidation is a real thing, Ithink.
For me it's.
The interesting thing is goingto be, as I kind of alluded to
earlier, what's going to happenwith employed physicians, not
just orthopedic surgeons, butemployed specialists within
(23:23):
hospitals and healthcare systems.
It's not that I see a massexodus coming, but I see people
leaving if those non-competesare abrogated, or physicians
looking for other opportunitiesout there.
So I think that that's going tocreate in my world.
It's going to make the biggergroups even bigger, because I
(23:45):
think that if people are leavingin that employed status, it's
not practical in today's worldthat you can take out a loan and
start your own practice anymore, so you're going to need to
have huge access to resources tobe able to establish new
practices.
So I see further consolidationin our world.
On the private equity front, Ithink, as you're aware, it's
been interesting there's been alot of private equity events
(24:07):
happening within orthopedics,but this whole concept of the
second bite of the apple hasbeen a little bit elusive in
these orthopedic platforms.
So I'm not as high on private.
I have nothing against privateequity, I think it's just a
business model.
But I'm not as high on thatconceptually for the future as
some others.
But on the other hand, thosefolks have huge access to
(24:28):
capital and maybe, since theyhave that access to capital,
it's always going to be that way.
I don't see, with any of thepolitical changes occurring in
the near term, any changesoccurring with the bukas, the
big healthcare payers.
They're going to continue togrow and become even bigger.
I suspect, and I still suspect,the hospitals and healthcare
systems are going to continue toenlarge as it makes sense for
(24:48):
them to do so.
Speaker 2 (24:50):
Wow, that brings up a bunch of questions, and I have
nothing against private equityeither, but there is a different
flavor, I think, between NorthVirginia and a orthopedic mega
group that was acquired byprivate equity in terms of the
(25:10):
very basis of it, right, becausey'all remain totally, 100% in
sovereign control of yourdestiny and, to your point, your
value programs and things likethat, what's important to y'all,
right?
Speaker 3 (25:21):
Correct.
I think that, as I always talkto my shareholders or physicians
around the country, as I alwaystalk to my shareholders or
physicians around the country.
private equity has exposed anopportunity to sell your
autonomy and control, butbasically you're giving up more
autonomy, more control, fordollars, and you and I both have
heard every private equitypresentation that we're not
(25:41):
going to have any impact onclinical care.
By definition, you have to havesome impact on clinical care
because if you're going to take30% of, or whatever that number
is of, any physician's incomeand apply it, that physician has
to do something to make up thatdifference.
So that's either got to be inthe resources that you're
utilizing or your efficiency andproductivity have to change
(26:04):
significantly.
So it's interesting.
It's going to be interesting tosee what happens, I think, with
OrthoVirginia.
I believe we function basicallyas a managed services
organization and if folks andpractices want to be part of
OrthoVirginia and we're alwaysin a robust kind of merger and
acquisition phase you come in asan equal partner.
(26:25):
Or if you don't want to be anequal partner, we can just
provide the services that arereally expensive services and
we're able to provide thembecause we can have some
economies of scale in the waythat we provide them.
So you can just buy servicesfrom us.
You don't have to become partof ortho virginia, if you don't
want to be right.
Speaker 2 (26:40):
Uh, I would be willing to bet you and I've
never talked about this, but I'dbe willing to bet that y'all
have stayed very clear of anyFTC stuff that your risks of an
antitrust lawsuit are probablyextremely low.
Yet you continue to havemergers and acquisitions across
the state and functionally yeah,I wouldn't use the monopoly
(27:03):
word but y'all become a largerand larger force, while never
really getting on the radarscreen of the FTC right.
Speaker 3 (27:12):
Well, I think, if you look at it, even though we try
to do our best to create goodcontracting with our payers, if
we do it in a value-basedapproach, which really we are
trying to decrease the overallcost of care, we're just trying
to wrestle some of that moneyaway from our payers.
As we're doing it, we'recareful about the numbers of
(27:34):
physicians we have, about themarkets that we're in, and we
have 38 offices across the state.
We'll have more probably by theend of the year and I think in
three out of the four marketsthat we're in we are probably
the largest player.
But I think we provide greataccess, we provide great patient
experience and we still providethe lowest cost of care in
(27:55):
every one of our regions.
So I think that's hard foranybody to look at and say that
this is not achieving the aim ofwhat we're trying to accomplish
within health care right, Ithink when, I was I wasn't
explaining myself for a while.
Speaker 2 (28:07):
I think, like where I live, there's functionally two
hospital systems and that's it.
There's one smaller privatepractice group, but everybody
else has either been acquired,quit, shut down, joined,
whatever.
And I would go as far to saythat neither hospital system has
been excessively predatory oranything that would look like
antitrust.
(28:28):
It just was a nature of thebeast, of the way that things go
, and I think that y'all, y'allare probably experiencing the
same thing that, through goodintent, you more or lesser being
able to merge and acquire thatwill.
Speaker 3 (28:43):
That.
That's our goal at least, andwe take seriously I take
seriously our work, ourcollaboration with the hospitals
and health care systems that wework with.
We certainly try to take careof the needs of our community.
We see all players.
You know sometimes privatepractices get this hit that all
they want to see are thewell-insured patients.
(29:04):
We see everybody.
Our rate of federal payers isthe same as everybody else
within our state.
So we're doing our share, Ithink, on all fronts, and
frankly I think and I've talkedto our Secretary of Health and
Human Services here in VirginiaI think we can provide better
and cheaper care, for example,to Medicaid patients within the
state, but the state justdoesn't have the wherewithal to
(29:27):
pull that trigger.
Speaker 2 (29:29):
And I'm very familiar with your practice and I would
fully support everything yousaid there In terms of, say, the
things like bundles, otherthings that are coming up that
we always hear forever, andother value-based programs for
orthopedic surgery and othermusculoskeletal services.
(29:50):
You got to think thatconsolidated groups are going to
be better able to negotiate andactually pull these contracts
off, as opposed to smallergroups, where that would just
the lift on that just way tooheavy.
Speaker 3 (30:04):
So the further down this, this pathway of value, we
go, the more expensive itbecomes to develop your approach
to it.
So the procedure-based bundlesare one thing.
We all have procedure-basedbundles.
We may have centers ofexcellence, which are a
different kind ofprocedure-based bundle.
Basically and I think most ofus even small practices can
probably relatively effectivelymanage the procedure-based
(30:28):
bundles.
As the work of Kevin Bozic andthe folks at Duke start to look
at condition-based bundles, itbecomes a little bit more
complex, because you have tothen take into account, if I see
somebody with a diagnosis ofknee osteoarthritis and I'm
going to be paid X number ofdollars per month to take care
of that patient, what happenswhen that patient goes to their
(30:48):
primary care physician or doesthis or does that.
So there's a lot morecoordination of care.
And then if you look at whereI'm trying to get with
OrthoVirginia, which is to jumpover the condition-based bundles
to basically subcapitation formusculoskeletal health, what I
would like is our big payers tosay okay, OrthoVirginia, for
non-emergent care, we're goingto pay you per member per month
(31:15):
for our population of patients.
You manage them.
If you want to give them alllow value care, that's your
dollars that you're spending onthose patients.
If you want to provide themwith high value care and you can
save money doing that, thenwhatever you're saving goes to
you.
But that requires it doesrequire people and it does
require an expense to be able tomake sure that you're managing
this thing, managing theseaspects effectively.
(31:36):
You have to have actuaries, youhave to have lots of different
aspects of this that we, asorthopedic surgeons, haven't
historically thought about.
Speaker 2 (31:44):
Yeah.
But to and to your point,though if you're doing these
condition-based bundles or thesubcapitated plans on that,
you've got to be consolidated tohave all the required people,
cause if you have nothing butorthopedic surgeons, you can't
do this.
You have to have other types ofhealthcare providers and
physicians within your, yournetwork, within your group that
(32:04):
can can deliver this lower cost,highly effective care, high
value care to the patients, forthe patients who don't need
expensive surgery.
But that requires consolidation.
Speaker 3 (32:15):
My surgeons are probably tired of hearing this.
If the next hundred physicianswe hired orthopedic surgeon, I
would hire non-surgeons for thenext hundred physicians.
We just need to continue toincrease the breadth of the
funnel.
The hard part is our models fora practice like OrthoVirginia
was built around orthopedicsurgeons.
So translating a shareholdermodel where people own part of
(32:37):
the company, and translatingthat to things like primary care
, sports medicine orrheumatology or PM&R or pain
medicine all of those thingsbecome a little bit more
challenging.
That's what we're workingthrough and I think we're
relatively effective at doing it.
But those are the challengesthat we have to work within to
make sure that we can create asystem where we're able to
(32:59):
provide all aspects of care.
If it was up to Dave Jezevar,my surgeon would not see Dougie,
your trauma surgeon.
So maybe a little bit different.
But me, as an arthroplastysurgeon, I wouldn't see a
patient unless that patient wasa surgical candidate.
I think that all the rest ofthe care should occur way
downstream, at lower cost carelower than my expense or your
expense and that we should besurgeons and living to the
(33:22):
highest level of our licensure,which I think is clinical
decision-making in surgery.
Speaker 2 (33:32):
And in a very efficient consolidated platform
those patients would beimmediately directed to the most
valued part of the organizationas possible so they could get
the best care at that levelrather than, to your point, the
more expensive folks which areyou and I, Correct, yeah, now
you've had an interesting career.
After the air force you were inintermountain in utah while you
you in your own practice thatyou sold to internet in utah you
(33:53):
were at dartmouth and I knowy'all were.
When you were at dartmouthy'all were looking at acquiring
different places there and nowat ortho, virginia.
So your entire career has beenone way shape or the other
involved with the consolidationkind of effort, anything, any
pearls or wisdom that you'veacquired from this multifaceted,
different viewpoints ofconsolidation.
Speaker 3 (34:16):
I think that the biggest thing, and probably
what's driven me down thepathway that I've gone, is that
we, as physicians, need to beinvolved in everything that's
happening.
Not all of us want to take thetime to do it, but then if
that's the case that you believethe physician should be
involved in leadership but youdon't want to do it then we have
(34:37):
to devise payment models forour leaders within our specialty
so that they're able to leadwithin all the organizations
that we're in.
And I think that what I've seenis, if we're not able to have
effective leadership, we're notable to have effective business
skills, we're not able todevelop effective quality
programs.
All of these things areintegrated.
(34:58):
If we're not able to do thatand frankly it's expensive to do
that that one of the only waysthat we're able to get there is
with consolidation, whetherthat's in a healthcare system
that has a lot of resources,potentially, or if it's within a
practice like OrthoVirginia,which I call a musculoskeletal
healthcare system.
We have everything about ahospital, everything else we
have within our system.
(35:18):
I think that's the type ofmodel that will work the best
for now, and probably at leastinto the next five to 10 years,
to be successful within theorthopedic and musculoskeletal
arena.
Speaker 2 (35:29):
This has been an absolutely fascinating
discussion.
I really appreciate you talkingwith us about this and look
forward to seeing you again, andDavid, and thank you for your
time so far on this AOA podcast.
Speaker 3 (35:41):
Thanks, doug, I appreciate it.
It was great talking to you, asalways.
Speaker 2 (35:44):
Yes, sir, and y'all look forward to future AOA
podcasts on the future inorthopedic surgery.
Thank, you.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.