|
Medical
Development Company offers a twist on the traditional PPMC Theme
Renowned
neuro-spine surgeon strives to add equity and ancillary services to spine
surgery practices
THOUSAND OAKS, Calif-John C. Chin, MD, believes there is a future beyond
the "traditional" physician practice management company (PPMC)
management model.
A neuro-spine surgeon specializing in minimally invasive arthroscopic
surgery of the cervical, thoracic and lumbar discs and laser endoscopic
spinal discectomy, Chiu has seen the opportunities for a practice
management and expansion model for clinics like his, and the future, he
believes, looks promising.
"We
feel that we can provide unique practice management services, as well as
equity infusion and significant expansion of ancillary services, for spine
surgery practces I " said Chiu, who is chairman and CEO of Minimally
Invasive Surgery Corp., based here. By focusing on spine surgeons' ability
to direct comprehensive care services for patients requiring spine
surgery, Chiu's company is helping surgeons improve their overall income.
Chiu
Minimally Invasive Spine Surgery Inc. (CMIS), a subsidiary of Minimally
Invasive Surgery Corp., serves as the practice operations and development
division of the corporation. Chiu, who is chief of neurospine surgery at
the California Center for Minimally Invasive Spine Surgery, said CMIS
functions as a "practice equity expansion" (PEX) company
specializing in the development of a national network of minimally
invasive spine surgery and pain management/rehabilitation centers.
"The
network will be built upon the foundation of these established
surgical/medical and rehabilitation practices," he stated. "We
will respond to the growing demand for minimally invasive spinal surgery,
and (we) intend to establish CMIS as a leader in this field."
Using
a "four-pillar" approach
Chiu
said his public company strives to provide practice equity expansion based
on four distinct care areas or "pillars": diagnostics, the
outpatient surgical facility, rehabilitation and pain management.
"In
the past, all of these aspects of care belonged to the hospital,"
Chiu stated. "Now, we want to bring those services into the spine
surgeon's practice to form a cluster of services within one center. That
way, the surgeon has more control regarding the overall spine care of the
patient."
Income
derived from these four "pillars" can potentially multiply the
prior professional practice revenue. For example, for every $100 in
physician's fees for a particular spine surgery case, the ancillary costs
for that same case, on average, can total several hundred dollars, he
said. When the spine surgeon can incorporate the diagnostic,
rehabilitation, pain management and outpatient surgical facility fees into
his or her own practice collections, the spine surgeon stands to make an
additional income.
"Our
job is to help surgeons organize these kinds of care centers in their
office-based practice and prepare them to be medical directors of spinal
care, not just surgeons," Chiu explained. "Most importantly, we
want to see the spine surgeon take a greater role in outlining the overall
care for the patient. This approach doesn't just benefit the physician,
either. It's a win-win situation, for the patient and for investors as
well."
One-stop
services
Chiu
said patients being seen for spine problems appreciate the
"all-in-one" service delivery approach when they visit the
clinic. "It makes it easy for the patient who can see the physician,
and he or she directs the patient where to go and what to have done,"
he said. "It also makes it easier for the patient when he or she can
go to the same clinic or office-based center and receive every
service."
Chiu
said Wall Street also likes his PEX approach because comprehensive
regional specialty medical centers like his are efficiently run, and
earnings for shareholders are drawn from the profits achieved by the
ancillary or pillar services.
"Shareholders
don't take their profits out of the physicians' share of the money,"
he said. "They aren't taking money that the physicians don't have,
and that sustains growth for both the shareholders and the
physicians."
Learning
from others' mistakes
Chiu
said he and his colleagues developed their PEX approach in response to the
failures many of the larger multi-specialty and single-specialty PPMCs
experienced over the past 18 months. According to Chiu, most of the PPMCs
that have incurred significant financial losses have shared a problematic
strategic game plan:
-
Most
PPMCs are typically very "top-heavy" with costs up front.
According to Chiu, excessively large corporate management teams are
often not cost-effective.
-
Most
management teams at PPMCs don't respond to what the doctors really
want ftom the management arrangement. That's because the teams are
headed by business professionals, not physicians, he said.
-
Many
PPMCs are also very debt-heavy. Chiu said many of these organizations
started off with good intentions but got so deep in debt after
acquiring practices that their income did not come in fast enough to
pay off their expenses. When this happens, the management team and the
physicians feel added pressure to perform. "It's' hard for the
physicians to believe that the management company is truly putting
their need for autonomy and their welfare as top priorities,"
Chiu said. Furthermore, many PPMCs charge a hefty management fee for
their services, but bring little added value to the practices, he
added.
"Our
motto is that we don't touch the physicians' part of it; we maintain what
they are doing and just add on as needed or recommended to improve their
services and income," he said.
What's
been most impressive to investors, Chiu added, is that his company focuses
solely on the minimally invasive spine surgery practice market, thus
enhancing its ability to target and affiliate with prime practice
candidates.
"Our
goal is to create a new system of comprehensive regional specialty medical
centers, without walls and without beds," he explained. "We
intend to grow by acquiring the assets of existing neuro and orthopedic
spinal surgery practices and develop CMIS centers within these practices
in conjunction with long-term management agreements."
He
compared his management approach to "the ninja warrior, who is nimble
and adjusts to change and adversity quickly, unlike the large sumo
wrestler who carries a lot of weight but cannot move quickly or
efficiently."
Chiu's
company has already affiliated itself with three spine surgery practices
in California, New Mexico and New York.
A
growing market
Chiu
believes his management/expansion model approach will continue to blossom
as more spine surgeons, including orthopedic and neurosurgeons, become
comfortable using an arthroscopic approach to spine surgery.
"With
minimally invasive surgery, all our patients walk out of here in about two
hours or so," he said. "Compared to the more invasive open spine
surgery, there is practically no blood loss, it's less traumatic,
psychologically it's a lot easier to recover from, there's very little
scarring, and there's little risk of infection from AIDS, etc., due to
blood transfusions. Patients practically always request the minimally
invasive approach when they have a choice."
Add
to that the fact that nearly 25% of all Americans experience back problems
on an annual basis, and 5% have disabling back pain, out of which
approximately 3% require some type of surgery, and there is a definite
need for a cost-effective, minimally invasive approach to surgery, Chiu
said.
Chiu,
who chairs, the American Back Society-Committee on Surgery and American
Academy of Minimally Invasive Spinal Medicine and Surgery, was
instrumental in developing lasers to shift and reshape the disc in a
process called laser thermodiscoplasty. He has since become a renowned
international speaker on the subject.
Comparisons
to knee arthroscopy
Currently,
only 5% to 10% of spine surgery cases are treated using a minimally
invasive approach because most spine surgeons are not trained in the
minimally invasive technique. However, that will soon change, Chiu
predicted.
According
to a recent survey by the American Back Society, most of the group's
members said minimally invasive surgery should be the first line of
defense offered in treating patients requiring spine surgery. "We
also feel that as many as 50% of all spine surgeries should involve some
degree of minimally invasive surgery," Chiu pointed out. "One
day, as many as 80% of all cases requiring spine surgery may be handled
using a minimally invasive approach."
He
compared the current market's potential with that of the knee arthroscopy
market 20 years ago. "Back then, few surgeons were trained to do
arthroscopic surgery for the knee, but that changed over time, and now
it's a first-line procedure in a lot of cases," Chiu said.
"Nowadays, if you don't do arthroscopic surgery (for the knee), you
look like you're outdated. Someday soon, that's how minimally invasive
spine surgery will be regarded.”
|
