Philadelphia-based Rothman Orthopedic Institute spent the first half of 2024 overcoming financial headwinds and expanding its footprint, said Rothman President Alex Vaccaro, MD, PhD.
Dr. Vaccaro shared how the practice has grown so far in 2024 and what is next.
Note: This conversation was lightly edited for clarity.
Question: What can we expect from Rothman in the second half of the year? What has been going great and how are you planning to grow?
Dr. Alex Vaccaro: Last year we were experiencing significant financial stress related to post-COVID-19 inflation, staffing shortages, rising cost of capital and stagnant reimbursement. With an aggressive restructuring we were able to reverse the financial performance of our organization without incurring debt or a cash infusion from a financial partner. This was a concerted effort by the physician board and management and has brought our financial performance back to pre-COVID times.
From January 2024 to June 2024, we have treated a total of 470,000 patients and performed over 35,000 surgeries. Our business has excelled under the leadership of our new CEO — Ed Tufaro. He was previously our senior vice president of operations but rose to this position due to his strategic thinking, humility and people skills. We also have a new COO — Mayange Kane, a new CFO Chris Higgins who came from OrthoVirginia, and a new CIO, Bryant Stetz. Jennifer Lombardo has risen to the position of head of our marketing department.
In Florida we have a great partnership with AdventHealth. We’ll see about 120,000 patient visits a year and we'll do over 11,000 surgeries in 2024. We're in our second year of our orthopedic residency program which has been successfully pioneered by Daryl Osbahr, MD, our managing partner and chief of orthopedics in Central Florida. The Florida group is also starting a primary care sports medicine fellowship. We opened up a new office at Lake Nona, and right now we have 34 physicians, and we expect to grow that to 50 over the next three years.
Our footprint has been expanding over the years with successes and setbacks that we continuously learn from. Right now we're the market share orthopedic leader in Central Florida. Locally in South East Pennsylvania we have opened a new office in Newtown, Pa., and we're looking at new office expansions across the greater Philadelphia region.
In New York, we have just opened a new office in Tarrytown, N.Y., since we outgrew our old space there. We have a great partnership with NYU in New York City and are exploring ways of expanding this relationship as a market force in Westchester County. We have several leaders who have been in that market since our entry five years ago including Michael Smith, a neurosurgery-trained spine surgeon and Brandon Erickson, an extremely successful sports medicine surgeon. Our spine practice has benefitted from the perspective of having two highly trained Neurosurgeons, one in New York and one in Florida.
Last year we experienced the difficulties of instituting a new revenue cycle management system but the growing pains have resulted in a more streamlined billing and collections process with improved efficiency in our collection success.
We continue to research ways of improving our ASC and our two specialty hospital business models. We are exploring ways of increasing our ownership percentage in the facilities we participate in while improving our contractual rates with insurance companies all with the goal of decreasing the cost of care for our patients. We along with our hospital partners understand that higher cost of care centers should be for tertiary and quaternary care and not for elective orthopedic procedures that can go home the same day or the following morning.
In terms of research, we continue to publish hundreds of peer-reviewed publications a year. We're ranked 9th in NIH funding for orthopedics, and are the highest-ranked department at Thomas Jefferson University in terms of NIH funding.
We are carefully reviewing where the government will fall with regards to non-competes and the effect the Supreme Court Chevron ruling will have on the FTC decision to ban non-competes with rare exceptions. The ban on noncompetes will offer an opportunity to hire the best in class in our regions. The way I view the medical business landscape is that we have an RVU war raging between hospital systems. More than 75% of all orthopedic graduates will join a hospital employed system. Hospital systems are raging this war to capture market share and offset the intrusion of outside capital from private equity. In private practice we don’t have the deep pockets or funding sources to compete at this time with this business strategy. We have to succeed by providing exceptional personalized care with motivated doctors interested in the flexibility and nimbleness of a private enterprise that they share ownership with.
Q: For ASCs, what is your strategy for increasing physician ownership in that space?
AV: Physicians are now more adept at the business skills of running surgical facilities without relying on a management company or hospital system that may demand an inordinate share of distributions. If one decides to use a management company, make sure your goals and vision are similar and the company is focused on minimizing the cost of care and has the clout to negotiate with the primary insurers in the region. Rothman has multiple hospital partners. In our Core Market we have Thomas Jefferson University, Main Line Health, AtlantiCare, Capital Health and down in Florida we have Advent Health.
If you choose to partner with a hospital partner, make sure the system is interested in providing their own physicians that will produce to the same percentage as their ownership percentage. If your hospital partner owns 55% of a facility you want the hospital to assist in having their employed physicians provide approximately 55% of work productivity of the center. In general the work productivity of a multispecialty ASC is often dominated by orthopedic cases. If the share of work is not proportionate to ownership this will eventually lead to dissatisfaction among the physician owners.