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Nate Kaufman
This is Nate Kaufman for the Healthcare Bridge, part of Rich Helppie’s Common Bridge. Our goal is to provide an insider’s perspective on our complex, crazy healthcare system. Today, my guest is Dr Leo Spector, the CEO of OrthoCarolina, and a renowned spine surgeon in Charlotte, North Carolina. Leo, welcome.
Leo Spector
Nate Kaufman. Thank you. I appreciate the kind words, reknown spine surgeon, I’m going to have you talk to my mother.
Nate Kaufman
I know, only what your mother calls you, right? Doctor. (Leo Spector: Exactly.) [Laughter.] Could you give us a little background on yourself and OrthoCarolina?
Leo Spector
Yeah, sure. Briefly, born and raised in the Boston area, my late father was an orthopedic surgeon, and actually his father before him was a general surgeon, so I guess something runs in the bloodline. Always knew I was going to be an orthopedic surgeon since I gave up the dream of being a firefighter, a policeman back in middle school. Did all my training and education up north. And then for my fellowship in spinal surgery, I came down to Charlotte, and after about three months, my wife fell in love with the Charlotte community, the weather and such, and so she thought I’d better find a job otherwise I’d have a long commute to see my family. So I had to go to my fellowship mentors and ask them; I was going to go back to Boston to practice with my dad, but you got a little space around here for me? They were kind enough to find me a job. I’ve been doing a fellowship for the last 20 years or so at OrthoCarolina, but a practicing spine surgeon only part time now, spent a lot of time in leadership roles at OrthoCarolina. OrthoCarolina is a large, independent physician owned and - one would say - operated practice. We’ve always had a deep governance committee structure with the shareholders, and at the top of that is our executive committee, or we’d say, our board, which is elected by the shareholders. I served on that for many years, got interested in the governance and the running of the group. About ten years ago, our former CEO, Dr Dan Murray, recruited me to be our chief quality officer. As we started the move into - I know you love the term, Nate - value-based care to do bundle payments, we were a little bit ahead of the game. I’m proud of what we do in the bundle payment world, because I do, to some extent, believe in those. We can debate that later, if you want. But probably about four or five years ago, I realized that there’s a reason people get professional degrees if they’re going to do something, and I also just had an itch to learn a little bit more so I went back and got my MBA, and then post MBA. Continued in the role as chief quality officer, took a little hiatus, and then almost two years ago, when my most recent predecessor, Dr Bruce Cohen, stepped down, applied for and was given the job as CEO. So I’ve been at the helm of OrthoCarolina for a little under two years. OrthoCarolina is a fairly large independent physician owned group in the Piedmont of North Carolina, with a little bit of extension to South Carolina. If we were hub and spokes, our hub would be Charlotte, and we’ve got plenty of spokes going up to Winston-Salem, up to Hickory down into South Carolina - Fort Mill, Rock Hill area. We’ve got about 30 or 35 locations, about 110 shareholders, a little over 200 total practitioners between APPs and and physicians employed, and those are shareholders. That’s OrthoCarolina.
Nate Kaufman
All right. Well, so let’s start with your medical. You’ve been in practicing medicine or surgery for 20 years. How have you seen the practice of spine surgery change, either from a business standpoint or clinical standpoint?
Leo Spector
I had a throwback yesterday in clinic because a patient brought me an MRI that was on plain film, and I don’t even have white lights to put them up and look at it anymore, so I would say the digitization of healthcare has occurred. When I started, it was all writing your notes by hand, your orders were by hand and now everything is electronic. Now we’re seeing, as AI begins to move into - and that’s a big, big topic in and of itself - healthcare. Finally, seeing healthcare move into the 20th or maybe 21st century, so to speak. That’s been a huge change. Over 20 years, insurance has been a huge change. When I first started practice, you come into my office in a lot of pain, think you got a hot disc, I’d have you downstairs in my MRI machine in an hour. And if you needed surgery, not a problem, or an injection, not a problem. Now it’s, we’ve got to check this box, that box and this box, and then maybe we’ll be able to get an MRI. So watching that change, of the physician having autonomy to make decisions, again, we can debate the pros and cons and how that may have led to some over-utilization at times, but ultimately, watching the loss of autonomy of physicians, which I think has led then to some of the burnout we’ve seen of physicians. Because at the end of the day, I think a lot of the burnout is not because of the amount of work they have to do. And yes, that’s another part of it, too, we’ve seen payments decrease. Physicians comp is not keeping up with the rate of inflation, nor the rate of business. I know no one’s ever going to cry for a physician and what they make, but most physicians, it’s a lot of training, it’s a lot of sacrifice. They graduate with a lot of debt behind a lot of their peers and most of them are highly intelligent folks that could have gone into a lot of other industries without that debt and been able to earn. But when you start seeing those, I really think the burnout has less to do with that. Yes, we’re having to work harder to maintain if we want to but really that loss of autonomy. I think most people when they went into medicine, at the core of it, they wanted to be able to care for people and be able to make the decisions, as opposed to answering to a bunch of check boxes or somebody on a phone who typically is not your peer, telling you what you can or can’t do because they’re just reading off of the insurance criteria. Which, at a high level, the insurance criteria is not wrong, the problem is it’s not individualized to each patient. That’s what we’re supposed to be able to do as physicians. So I think those changes are the big ones that I’ve seen.
Nate Kaufman
One of the things about OrthoCarolina is that you are independent. You’ve been able to maintain your independence. About 70% of physicians are no longer independent. They either work for PE firms or corporations or health systems. What’s the secret at OrthoCarolina?
Leo Spector
think there’s a multitude. I think one of them is we’ve been blessed with being in a growth area. The Carolinas have seen a lot of population growth. I think that in and of itself, for any business to be successful, it doesn’t hurt if you’ve got some nice tailwinds behind you. Secondly, the folks that had the foresight to found this group, they did it not because they wanted to try to raise the cost of care - which we had to fight a DOJ lawsuit when we formed the group, which we won because we did not raise the cost of care. What really they wanted to do was they realized that where healthcare was going, if we weren’t able to grow and get economies of scale, we wouldn’t be able to maintain our independence. And the folks that founded the group - and I literally started at OrthoCarolina the year it was founded as OrthoCarolina - when the two legacy groups came together, those founding folks fervently believed in the independent practice of medicine, and the fact that independent doctors should not be told by a hospital system or by an academic institution. There are roles certainly for employed doctors, especially in academics, but they fervently believe that there’s nobody better to make decisions about caring for the patient and then subsequently running the business than the physician. I think it’s that spirit that has really driven the group. I think the key thing, what the group adopted was a message and a mission that really focused around patient care, around education, around research. And so we developed a national reputation because we have our own research institute where we produce our own research and our own papers. We have our own fellowships. We have 15 fellows a year that we train. A lot of independent practices - my late father’s practice was just an independent practice, it was a small business - really had a commitment to caring for the patients, doing the research that moves things forward and training the next generation. I think having that full mission is probably the reason we’ve been able to be successful, because that allows us to recruit talented physicians, folks that want to be independent and not have to answer to a hospital administrator. They want to be able to control the day to day operation of their practice, and have a say in its future, its finance, its growth, the direction it takes, but still want to produce good research, train the future, and so it tries to be that sweet spot with that private, dynamic model that tries to have it all, which is, it’s challenging at times, for sure.
Nate Kaufman
I’m on record as being in favor of independent practice. One of the issues that I face when I deal with independent practices who are all of a sudden bankrupt, is physician leadership. From your perspective, what is the key to being a successful physician leader and getting these really, really smart, well-trained people to work together, as opposed to say, this is my practice and I’m a cat that you’re not going to herd.
Leo Spector
And listen, at the end of the day, I show a picture of a shepherd herding a bunch of cats, and somebody saying, the guy’s good, because you are herding cats at the end of the day. But I think that, one, trying to get people to buy into a greater mission and understand that. I think at the core, most physicians still are in the business and want to care for patients and they understand that it’s much more important to point the spears outward than inwards. At the end of the day, I explain to them, listen, you may or may not like your partner, but you guys are sharing call and sharing overhead. The guy that’s employed by the hospital, you might be sharing call, but he’s certainly not sharing overhead so at the very least, understand the economics of why you want to at least get along so you can get that working. I think the other part is, while we’ve had physician CEOs for 18 of the last 20 years, we’ve always had a strong professional team working for that CEO. Our CFO, who’s been with us for 18 years, we’ve got a chief legal officer, chief operant, all professional folks that know how to do that. The job really is the physician leader. The CEO is to create the environment to let them do their work. Our first CEO was not a physician. He was there for two years. Great guy. He left, and his parting words were, you need a physician as the CEO. Because nobody can tell these guys how to behave, and what he found was - at the time I think there were 60 docs - he had 60 bosses telling him what to do and he couldn’t say no because he wasn’t a physician. And so he said you guys need a CEO that’s a physician who can basically protect, cover, your administrative team so they can go do the work they need to do to run the practice and shield them from the group politics. The CEO sits in that role where, when my partner calls me up, I can call his baloney or her baloney and just say, come on, please, I practice too. I take call, I operate. I know, I hear you, but go back to the clinic and care for patients and let the professional CFO or whoever, deal with this financial matter. I think we’ve always had strong governance, and I think that’s the key, and not just from the CEO being a physician, but our president, Rob McBride, who’s been president 18 the last 20 years, and having a very engaged executive committee. I remember early on being on the executive committee, there was one of our offices that we had just merged, acquired into the group, and they were not fitting into the culture. Literally, one day, we rented a bus, and the ten of us drove up the mountain. And we had - I think down here they call it a come to Jesus conversation, that’s not what I learned to call it - that conversation of what the hell are you guys doing? This is not how we behave and how we treat each other. But I think the fact that the ten folks, their partners, took the time to go up there and meet with them face to face and call them out left a profound impression that, okay, this is not the culture. We’re not going to tolerate that. It is a really interesting balance between, yeah, I get it, you’re an independent practice, you should have autonomy, but you also chose to be a part of a very large group, and so you gave up some of that autonomy. If you want full autonomy, go hang the shingle, be an independent doctor, let me know how it works out, and if you don’t like this alternative, then go join a hospital system and let me know what voice you have, So it’s reminding them of that.
Nate Kaufman
Let’s talk about hospital systems. I’m somewhat familiar with your market, you’ve got two major health systems in that market. How does an independent group work with these health systems, knowing the fact that - I deal a lot in orthopedics - the orthopods have their own MRIs, and they have their own PT, and their own surgery centers, and the hospital’s now employing their own physicians, whether it’s neurosurgeons to compete with spine surgeons or whatever. How do you work in that type of environment where it’s almost “co-ompetition?”
Leo Spector
I think “co-ompetition” is a great word for it. Up until recently - and we can talk about that - we’ve been very successful having somewhat of a Switzerland strategy, which has been within the market, we’re going to work with whatever hospital systems are there. There are two large ones, but if you go out to some of our other locations, down in Fort Mill, Rock Hill, we deal with a whole different system out in Gastonia and Belmont. Whole different system up in Hickory. Whole two whole different systems, but you’re right, there are two large systems based out of Charlotte. We’ve always taken a Switzerland approach, which is to say, if we receive a patient that’s directly referred to us from your system, we will take it to your hospital system, you referred it to us. Again, there’s nothing contractual about that. There’s no kickback. It’s just that that’s the right thing to do. If the patient comes to us because they want OrthoCarolina, then ultimately I’m going to take the patient where I think I can better care for the patient. Then it puts the auspice on the hospital to make it a better environment for me to want to operate, which I think creates healthy competition between the hospital systems, which I think helps them to raise their gain, which ultimately helps to improve the patient experience and care. I think competition is good. The challenge we launched recently, as you well know, is that North Carolina, prior to a couple of years ago, was a CON (Certificate of Need) state, and so the ability to own and operate an ASC (Ambulatory Surgical Center) independent from a hospital is very challenging. We were lucky enough to be awarded a pilot program for the state, and that created a lot of ruffles with the hospital systems. But CON is about to go away in North Carolina. It’s already gone away in South Carolina, and it really has created a lot of challenging issues in our relationship. As I told my partners, we’ve always tried to be Switzerland, everybody’s happy to bank with us, whether the allies or the access or whatever side you’re on, you can always count on your Swiss bank account. But all of a sudden, Switzerland just got handed a nuclear bomb, and so no one’s comfortable with Switzerland being Switzerland. They all want to know, when push comes to shove, whose side are you on? It’s created a lot of challenges, candidly; it’s created a lot of opportunities; with any challenge comes opportunity. But I would say that CON reform is a true blessing and a curse for us, and it probably is forcing us to really re-evaluate how we remain Switzerland. Hopefully at the end of the day, the way we do it is to cut deals with both systems and to be able to partner with them in ways that are accretive and in the right place, in the right circumstances; do a joint venture with one, and then do a joint venture the other, and try to maintain that. That’s what we’ve always tried to do. We’ll see if we can continue to be successful. The legacy of our groups, by the way, Nate, which probably is part of the DNA there, is they were two competing groups. One was very close to one hospital system, and one was very close to the other hospital system. And so when they came together, both hospital systems lost their own independent orthopods, and had to figure out, what are we going to do with this new merged entity? And I think their biggest concern always has been we would move 100% one way or the other. There’s been a bit of - on their side -appeasement as well, where they don’t want us to say we’re moving wholly into this camp. So they’ve had to have a balancing act. I think for them now, the spectra of us being able to open our own ASCs on our own is just an existential threat. Because this is where these hospital systems make money, and if all of a sudden the vast majority of their elective orthopedics walks out of their HOPDs (Hospital Outpatient Department) and into my ASCs, they’ve got a big math problem on their hands.
Nate Kaufman
Right, and HOPD means hospital rates (Leo Spector: Correct.) Just want to make sure that everyone understands that. Do you have any advice for health systems on how to deal with doctors? I don’t think that a lot of health systems know how to deal with independent physicians, or even employ physicians for that matter. If you could give the health systems advice, what would it be?
Leo Spector
I think transparent communication. I think take the time to get to know and hear the docs. It doesn’t mean that you’ve got to respond to 90% of the stuff that they bring up, because a lot of it’s going to be a bunch of baloney. But these are highly intelligent, highly trained individuals that really care about the patient in a deep way, and they risk a lot, their personal sacrifice, the financial and medical, legal liability, and it’s a stressful job. When you don’t feel like you’re being heard about what your concerns are, whether they’re legitimate or not, I think that’s when people really start to misbehave. It’s hard, but I think you got to really sit there and listen to them. Understand what is legitimate and what’s not, and where there’s legitimate and common ground, work together for places that are win-win. There may be places where you just say, listen, we’re going to agree to disagree. We get that this is in your best interest, but it’s not in our best interest. Here we’re just going to have to diverge, and don’t take it personally. It’s business, don’t take it personally. It’s okay that we’re going to diverge here. We can still do business over here. I would say communicate and don’t take it personally. Those are two good pieces of advice.
Nate Kaufman
Yeah, from my perspective, I think it’s important to recognize the physicians as people, which many don’t take the time to get to know them, which I think is absolutely critical. And don’t put “MBAs” over physicians, the dyad is really important, and whoever is supervising the physicians, there needs to be mutual respect. If you took me out of school and put me over a bunch of physicians without the experience that I have, I would screw it up big time.
Leo Spector
I totally agree with you. And I think another part of it too is often the administrators look at the physicians as cogs in a wheel, just those factory line workers. Now, to some extent, that’s not a bad thing, because the doctors have to realize, no matter how big their ego is, that they’re not as great as they think they are. I think 80% of surgeons think they’re above average. Well, statistically speaking, that’s not the case. But that being said, if you went to a hospital administrator and said hospital administrators are all the same, I promise you, he or she is going to say, Oh, are you kidding me? I know that guy at the hospital. He’s terrible, I’m great, Like you said, you’ve got to treat them as people and realize that at the end of the day, they are skilled craftsmen, yes, more and more on an assembly line, but they are still skilled craftsmen that want to be appreciated, and they’re not all equal, so it’s that balance. The doctors want to think the world centers around them, their ego is too big. The administrators want to think the doctors are plug and play and it doesn’t matter. And really, the truth lays in between, like most of the time in life. And so if you can meet each other there and communicate that and value that. I think that’s really the key.
Nate Kaufman
Back pain is pretty popular. Do you have any advice for patients, just in terms of how to navigate the healthcare system or how to deal with back pain? Whatever you think is important.
Leo Spector
Well, listen, I think there are some very basic things; healthy diet, don’t start smoking, because we know the deleterious effects of tobacco use with regards to the back, so if you are smoking, stop. Try to stay in good shape, which doesn’t necessarily mean being skinny versus versus overweight. It really has to do with being healthy with core strength and flexibility. I’ll put in a plug for a book. It’s not mine, but I recommend it to every one of my patients, it’s called “Back RX.” Dr Vijay Vad can thank me if a bunch of you go and buy his book, but I’m sure zillions already have. What I like about it is it’s 15 minutes of daily back exercises. It’s really just a combination of therapy, Pilates, and yoga, but doing something to work and maintain core strength and flexibility. I think what happens to too many people as they start as we get older, our backs become stiffer, they become sore. They hear lots of misinformation and so really avoid the misinformation, go to the experts. They get scared of their back. They stop using it. Their back gets stiffer, it gets weaker, and it becomes a self-fulfilling prophecy. And so I think that’d be my big advice. The last one, really is, if you’re having that pain, go see an expert. Most of the time, what they’re probably going to tell you is that there’s nothing harmful occurring. It may hurt, it’s pain, but it’s safe, and safe pain is okay to work through, that’d be my main advice. Try to avoid surgery. Surgery should always be the very last thing you do. Now, there are times where you should do it, there is a role for spinal surgery for folks, but it should be the last option.
Nate Kaufman
Anything we didn’t cover that you want to comment on with respect to your practice, the healthcare system, health systems, or whatever?
Leo Spector
No. I think it’s a really interesting time in healthcare. I do feel like we’re starting to really hit the tipping point. I just don’t know where it’s going to tip. We’ve got an aging population. We’ve got increasing treatments that raise expense. The numbers just don’t work. We’re starting to get a shortage of physicians, which typically in normal market dynamics would mean supply and demand, you get paid more, but yet, doctors salaries are tied and fixed to government reimbursement. And so the normal market forces that would fix the problem don’t exist. I do think we’re really at this tipping point. I don’t think that the federal government, in its wisdom, is going to fix all our problems. I think what Ronald Reagan said, the nine scariest words are: We’re from the government and we’re here to help. But the government probably does need to create the situation to allow for market forces to fix the problem that we have. I’m still excited about the future of healthcare. I still think healthcare is a great place to be, but it is a little sad. Most physicians I talk to would not encourage their children to go into that, and I’m a third generation surgeon, so clearly there was encouragement to continue in that. Neither of my children have any interest of going into healthcare, and I don’t think I’m alone in that, and that worries me as a consumer of healthcare, now that I turned the big 5-0. I know you’re a couple years ahead of me, Nate, but I’m going to have to start consuming more and more healthcare, and I’m worried about who’s going to care for me, and I think that’s going to be a big problem.
Nate Kaufman
Before I finish up, I want to talk about that for a second, because people talk about, well, we’re a healthcare system, we shouldn’t be a sick care system. Well, I’m going to tell you, from my perspective, as somebody who’s almost 72, I’m really glad we have a sick care system. As far as healthcare is concerned, yes, I need to exercise and do all those things, but that’s my responsibility. I don’t know how much time during the day... how much do you get paid from Medicare or Medicaid or somebody like that, to tell people that they need to exercise?
Leo Spector
You don’t. And that’s exactly right. At the end of the day, America is all about individual responsibility. It’s what this country was founded on, it’s not going to change. To think that we’re going to behave like other parts of the country... there’s a reason people emigrated to the United States, that people stay in the United States. And so you’ve got to develop a system that addresses the consumer of care. I agree with you, how we do sick care, how we educate the population. I think some personal responsibility in the system would probably be helpful too, to reward good behavior and change some that is not there. But, I agree with you, it’s a big problem. It hasn’t gone away despite everybody trying to have their great plan that they’re going to solve it, whether it was Hillarycare or Obamacare or Trump’s attempts to replace Obamacare. I don’t think it’s going to be solved at that level. I think physicians have to be involved and they have to, stand up for the profession and really for our patients.
Nate Kaufman
I’ve been thinking a lot about healthcare as we close this, and one of the most interesting things I find is we have the world’s largest health benefit organization called the federal government; provides Medicare coverage, provides Medicaid coverage to the tune of $1.8-1.9 trillion a year. And in this organization, either every four or every eight years, we get a new CEO, whether we like it or not, and they come along with their own sets of policy. How can we possibly come up with any “product” that makes any sense when there’s mandatory turnover of the executive team every four to eight years?
Leo Spector
Well, it’s become highly politicized, whether you’re on the left or the right, it’s highly politicized, and it shouldn’t be, caring for people shouldn’t be a political issue. It should be a societal issue about how are we going to do that and pick one out that works best for the society we’re in? America is not Europe, it’s not Asia, it’s America, and we should have a societal solution to it. But you’re right, it’s politicized and you have different leaders always trying to put their stamp on it so at the end of the day, we really go nowhere.
Nate Kaufman
All right, healthcare is really complex, and there’s a lot that doesn’t make sense. There’s a lot of opinions out there from academic missions, policy makers who have no idea what’s going on in the trenches, which is one of the reasons we asked Dr Spector here. If you have a healthcare issue, seek the guidance of an insider who truly understands how crazy the healthcare system is. Your life may depend on it. I want to thank Dr Spector for his time. This is Nate Kaufman Kaufman signing off for the Health Care Bridge.
Leo Spector
Thanks, Nate.
