Aligning Stakeholder Incentives in Orthopaedics

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Executive Summary
Aligning Stakeholder Incentives in Orthopaedics
Natalia A. Wilson MD, MPH, Anil Ranawat MD,
Ryan Nunley MD, Kevin J. Bozic MD, MBA
Published online: 6 June 2009
The Author(s) 2009. This article is published with open access at
Productive discussion and analysis of how to align stakeholder incentives in orthopaedics requires identifying the
key stakeholders, understanding their perspectives, delineating the issues necessitating alignment, and being willing
to delve into contentious areas. The participants of the
2008 ABJS Carl T. Brighton Workshop in Tampa, Florida
did just this and pushed themselves to never lose sight of
Dr. Carl T. Brighton’s questions: ‘‘Where are we now?’’;
‘‘Where do we need to go?’’; and ‘‘How do we get there?’’
We summarize the discussion, thoughts, and work presented by the workshop participants surrounding the very
important topic of aligning stakeholder incentives in
orthopaedics and key areas in need of focus. These key
areas include insurance reform, specialty hospitals, physician-hospital alignment, physician-industry relationships,
regulatory changes, movement beyond physician-centric
issues, and the overall need to create value for the
healthcare system. We have addressed the pertinent questions surrounding stakeholder alignment in orthopaedics
and laid out the groundwork needed to answer Dr. Brighton’s last question, ‘‘How do we get there?’’ Concluding
remarks address the necessity of leadership by orthopaedic
surgeons to drive change in these key areas.
Key stakeholders in orthopaedics include physicians,
hospitals, suppliers, payors, patients, and policymakers.
Although these groups have different perspectives and
interests, their ultimate goal is the same: to improve the
quality of care for patients with musculoskeletal disease.
The genesis of many of their differences can be traced
back to educational training with further development in
the environment in which these stakeholders function
professionally, and by virtue of the different inherent goals
of their respective professions [2, 8]. In general, physicians want good patient outcomes, autonomy, efficiency,
and fair compensation for their work. Hospitals want to
provide high quality, cost-effective care to their patient
population, and to decrease their risk. Suppliers want to
foster loyalty and sales of their products. Payors want to
add value, cover lives, and in the case of commercial
payors, generate profits. Patients want good outcomes,
transparency, and trust. Policymakers want to maximize
health benefits with a fixed amount of healthcare resources. The critical question is how to align these different
perspectives and interests.
This manuscript was written at WP Carey School of Business,
Arizona State University, Tempe, AZ with input from co-authors via
e-mail. The material for the manuscript was obtained from the 2008
ABJS Carl T. Brighton Workshop, Tampa, FL.
N. A. Wilson (&)
Health Sector Supply Chain Research Consortium,
WP Carey School of Business, Arizona State University,
300 East Lemmon, Tempe, AZ 85287-4506, USA
e-mail: [email protected]
A. Ranawat
Hospital for Special Surgery, New York, NY, USA
R. Nunley
Washington University Orthopedics, Barnes Jewish Hospital,
St. Louis, MO, USA
K. J. Bozic
Department of Orthopaedic Surgery & the Philip R. Lee Institute
for Health Policy Studies, University of California,
San Francisco, CA, USA
Clin Orthop Relat Res (2009) 467:2521–2524
DOI 10.1007/s11999-009-0909-4
There are multiple areas which could benefit from
alignment of incentives among orthopaedic stakeholders.
There is the need for effective dialogue between clinicians,
hospital administrators, payors, suppliers, patients, and
policymakers in order to improve quality and efficiency
and to reduce administrative costs and waste in the system.
Moving forward with these goals will require credible data,
an improved evidence base, transparency, particularly
involving cost and quality, and the need to address overand under-utilization of services. There is the need to
address conflicts of interest, to work on new payment
models, and to move away from ‘‘zero-sum competition’’.
Overall, there is great need to create value for the healthcare system and to assure accountability.
What Are Some Contentious Areas?
Insurance Reform
Efficiency, transparency, and creation of value for the
healthcare system are key issues related to alignment in this
area. In order to address these issues, collaboration
between providers and payors is needed. Yet, how does one
start this collaboration?
Data sharing with physicians, beyond practice profiling,
is critical for improved quality and practice efficiency. Yet,
establishing a dialogue and mutual sense of trust and
respect between physicians and insurance companies is
difficult. There is great need for improvement of the
healthcare infrastructure to lead to better efficiency,
decreased overhead, reduced frustration, improved transparency, and improved physician-payor relationships. How
is this movement started? How does one help create a more
efficient system and decrease insurance premiums?
The value that insurers provide in healthcare needs to be
evaluated and understood. The medical profession itself
needs to take ownership and start to be providers of this
value. As a means to this goal, the medical profession
needs to become more proactive in ongoing attempts to
determine the best models to improve the quality and
efficiency of patient care. Lastly, insurers could provide
great value by funding continuing medical education,
research, and addressing the problem of the uninsured.
Specialty Hospitals
Surgical specialty hospitals offer clinicians the opportunity
to provide focused, efficient care delivery to a specific
group of patients. However, concerns about physician
ownership, self-referral, and patient selection bias have led
some policymakers to raise concerns about the impact of
surgical specialty hospitals on the viability of general
hospitals [4, 6]. Efficiency, creation of value, conflicts of
interest, issues of overutilization, and new payment models
are key issues related to alignment in this area. In order to
address these issues, collaboration is needed between
physicians and hospitals.
The need for equitable solutions for the general community hospital versus the specialty hospital has emerged
as an important area for consideration and discussion.
Conflict exists between the need for coverage of services at
general hospitals versus the opportunity for orthopaedic
surgeons to provide focused, high quality, efficient care for
their patients in specialty hospitals. Conflict exists due to
the perception of ‘‘cherry picking’’ by specialty hospitals,
leaving the more complex and poorer reimbursed patients
at community hospitals. Use of community hospitals in
emergency situations for specialty hospital patients has
emerged as a contentious issue without current resolution.
How specialty hospitals and general community hospitals
can learn from one another and collaborate to assure
improved outcomes must be further clarified.
Issues of patient protection have also arisen with the
emergence of specialty hospitals. How does one evaluate
the potential conflict of interest and overutilization when a
surgeon recommends surgery at a specialty hospital where
he/she has ownership? What is the best solution for the
patient when complications arise at the specialty hospital?
A new type of payment reform called episode of care or
bundled payments has added to the debate regarding hospital-physician alignment. Bundled payments involve a
single payment from an insurer to a physician-hospital
organization which incorporates both professional fees and
hospital/technical fees for a given episode of care. Although
several demonstration projects employing bundled payments for hip and knee replacement are ongoing, issues
related to defining the episode of care, how the payments
are divided among the stakeholders, and the impact on
quality and efficiency have yet to be resolved [1].
Lastly, an area in need of thorough evaluation is the
relationship of physician-owned hospitals to outcomes,
surgeon efficiencies, patient satisfaction, industry influence, and patient demands for certain therapies.
Physician-Hospital Alignment
Improved physician-hospital alignment requires leadership
on both sides, incremental building of relationships,
development of trust, good communication, fairness, comanagement, and a vision to look beyond self-interests to
collaborative approaches for improving quality and efficiency of care. Physician-hospital collaboration is
particularly needed surrounding long-term solutions to cost
2522 Wilson et al. Clinical Orthopaedics and Related Research1
containment, quality, prevention of complications, and new
reimbursement models involving bundled payments.
Although gainsharing arrangements, in which physicians receive a share of hospital savings attributable to their
efforts, are a potential short-term cost-containment solution, the sustainability of savings for the long run is
questioned. In addition, legal considerations including
Stark and kickbacks complicate this method of alignment
[3, 5, 7]. Smaller community hospitals may be at a disadvantage for supporting change for physician-hospital
alignment due to lack of volume or efficiencies. How can
this be addressed?
Physician-Industry Relationships
Cost efficiencies, evidence-based information, and creation
of value are key issues related to alignment of physicianindustry relationships. In addition, there is a great need to
move away from ‘‘zero-sum competition’’ in the physicianindustry-hospital triangle.
Concepts for alignment of physician-industry-hospital
and movement beyond ‘‘zero-sum competition’’ include
focus on the influence of supplier representatives, development of specific guidelines relating to physician-industry
relationships, involvement of suppliers in cost-efficiencies,
physician input on hospital and payor value analysis teams,
attention to the relationship between surgeon preference
and leverage used by industry with hospitals for implant
pricing, consideration of unbundling of the implants from
the representative, and use of evidence-based information
as a basis of alignment. The question is, how to initiate these
concepts? How would a center for comparative effectiveness help in this arena? Lastly, what is the value proposition
for the use of ‘‘older’’ implants versus the newest and more
expensive implants in terms of patient outcomes?
Other Physician Focus
The need to move away from ‘‘zero-sum competition’’ and
the need to create value for the healthcare system are key
factors for physician focus for alignment of stakeholder
incentives. Older regulations and laws that limit the current
system are in need of attention and reform. Going forward,
physician input will be critical in the areas of health
information technology, integrated care delivery models,
and prioritization of scarce healthcare resources.
An ability to move beyond traditional physician-centric
issues will be essential as health care reform initiatives
begin to take shape. Physicians need to focus on global
issues that cross specialty lines, quality of patient care, the
reasons they initially entered medicine as a profession, and
they need to organize with collaborative groups surrounding common issues. And, most importantly, physicians
need to speak up for their patients.
Alignment of stakeholder incentives in orthopaedics is a
difficult area due to the different incentives and interests of
the stakeholders. Areas in need of attention include insurance reform, orthopaedic specialty hospitals, physicianhospital relationships, physician-industry relationships,
regulatory changes, and the focus on physician-centric
issues. Despite these challenges, there are multiple issues
necessitating alignment.
The participants of the 2008 ABJS Carl T. Brighton
Workshop listened to the perspectives of different stakeholders in the context of workshop presentations and came
together to address Dr. Brighton’s questions ‘‘Where are
we now?’’ and ‘‘Where do we need to go?’’, as detailed
above. Yet, the question ‘‘How do we get there?’’ remains.
Physician leadership is critical as a driver of change for:
(1) aligning goals of efficiency between insurers and providers; (2) addressing tensions surrounding orthopaedic
specialty hospitals; (3) building primary leadership and
trust between hospitals and physicians; (4) addressing
issues surrounding industry relationships; (5) organizing
within the profession to focus on common issues and move
beyond physician-centric issues; and (6) focusing on creating value for the healthcare system. It is the hope of
the workshop leaders and participants that physicians
consider the sentiment and recommendations from these
proceedings as a starting point to become the drivers of
change to achieve alignment of stakeholder incentives in
Open Access This article is distributed under the terms of the
Creative Commons Attribution Noncommercial License which permits any noncommercial use, distribution, and reproduction in any
medium, provided the original author(s) and source are credited.
1. Centers for Medicare & Medicaid Services. Details for Medicare
Acute Care Episode (ACE) Demonstration. Available at: http://
descending&itemID=CMS1204388&intNumPerPage=10. Accessed March 29, 2009.
2. Cohn KH, Gill SL, Schwartz RW. Gaining hospital administrators’
attention: ways to improve physician-hospital management dialogue. Surgery. 2005;137:132–140.
3. Dirschl DR, Goodroe J, Thornton DM, Eiland GW. AOA
Symposium. Gainsharing in orthopaedics: passing fancy or wave
of the future? J Bone Joint Surg Am. 2007;89:2075–2083.
Volume 467, Number 10, October 2009 Stakeholder Incentives 2523
4. Greenwald L, Cromwell J, Adamache W, Bernard S, Drozd E,
Root E, Devers K. Specialty versus community hospitals: referrals,
quality, and community benefits. Health Aff (Millwood).
5. Healy WL. Gainsharing: A primer for orthopaedic surgeons.
J Bone Joint Surg Am. 2006;88:1880–1887.
6. Igelhart JK. The emergence of physician-owned specialty hospitals. N Engl J Med. 2005;352:78–84.
7. Ketcham JD & Furukawa MF. Hospital-physician gainsharing in
cardiology. Health Aff (Millwood). 2008;27:803–812.
8. Meltzer MI. Introduction to health economics for physicians.
Lancet. 2001;58:993–998.
2524 Wilson et al. Clinical Orthopaedics and Related Research1

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