Recently the ADN printed an opinion column with an interview with Dr. Alan Gross that contained some remarkable statements. Remarkable enough that an opinion column was put on the front page instead of its usual spot back in the local news section. The claims about Dr. Gross' compensation as an orthopedic surgeon in Juneau back in 2013 were certainly interesting reading. Dr. Gross said he was making $2.5 million a year, about half from the practice of orthopedic surgery and about half from his group's investment in an MRI and X-rays. He stated he was making that level of income while doing five to six surgical cases a week. The reader was left with the impression that Dr. Gross' compensation is typical of orthopedic surgeons in Alaska. That article was part of opinion columnist Charles Wohlforth's continuing series about his views on Alaska health care.
As an orthopedic surgeon who has been practicing in Anchorage for the last 22 years, I think it is important to let Alaskans know that my experience, and that of my Anchorage colleagues, has been far different from that of Dr. Gross. I have no way of verifying Dr Gross' compensation claims, but I can compare them to data from my own practice, Orthopedic Physicians Alaska (OPA) , that contains 24 orthopedic surgeons. I have talked to people who were familiar with Dr. Gross' practice in Juneau so I have some idea of the types of surgical cases he was doing. Using our overhead, our fee schedule, our payer mix, and Dr. Gross' stated surgical volume, if he had been working at OPA in 2013, a generous estimate is that he would have taken home $400,000 a year. In 2018 that amount would be significantly less. This is a very good living by any standard but far short of $1.25 million. I have talked to some other orthopedic practices in Anchorage and their experience is more in line with ours at OPA than with Dr. Gross'.
At OPA we have also invested in X-rays and an MRI. Federal regulations only allow medical practices that own imaging to use them for patients from their practice. Referrals from outside the practice are not allowed. We have 15 doctors and 15 physician assistants ordering imaging in our Anchorage office. Not all of the MRI's we order are done at our facility so it still takes almost 30 providers to make our MRI run at near capacity. My understanding is that Dr. Gross' old practice had four providers ordering imaging. The return per shareholder at OPA for imaging is less than one fourth of what Dr Gross states he was getting in Juneau. Given all this, I would certainly agree with Dr. Gross that he should feel guilty about the compensation he was receiving.
Dr. Gross left private practice in Juneau in 2013 and currently is a salaried physician in Petersburg. As such he is fairly insulated from the current status of orthopedic private practice in the rest of the state. Over the last two years, all of the orthopedic surgeons in Anchorage, the Mat-Su and the Kenai in private practice have signed contracts to become in-network providers with all of the major private insurers in the market. Due to nondisclosure agreements we are unable to give exact figures, but, at least for OPA, these contracts came with deep, double-digit reductions with built-in further yearly reductions for the life of the contract. The orthopedic community is well aware of the effects of rising health-care costs on our patients and neighbors in these difficult economic times and we entered into these contracts in order to do our part. Furthermore, the State of Alaska medical fee schedule for worker's compensation has seen a 20 percent drop for surgical fees in the last two years and will continue to decrease. Things have reached a tipping point and the market is changing rapidly, making it hard to keep up.
The latest Milliman report on private health-care costs for Alaska that Dr. Gross cited in that column was completed in 2016 using 2014 data on physician reimbursement for private insurance. Premera Blue Cross, which paid for the study, did not release it to the public until November of 2017. Due to the private insurance discounts that have been negotiated with not only orthopedic surgeons but also cardiologists and neurosurgeons, this 2014 data is no longer relevant for specialists. Unfortunately, due to how health care data is collected and disseminated, it will be a few years before these more recent changes can be seen.
Mr. Wohlforth has stated that he believes that one of the main reasons for the overall high health-care costs in Alaska is overpriced specialists such as orthopedic surgeons. I would point out that of the almost 2,000 actively practicing physicians in Alaska, only 78, or 4 percent, are orthopedic surgeons. Extrapolating from our own practice, OPA, home to 24 of those surgeons, I estimate that orthopedic professional fees account for just 1.5 percent of total health care spending in Alaska. Dr. Gross, using that 2016 Milliman study and its outdated 2014 data, estimates that Alaska "overpays" all specialists by $300 million. While certainly a large number, even it was correct, it would represent just 4 percent of Alaska total health care spending.
Additionally, Mr. Wohlforth has asserted that ever-increasing specialist fees are one of the main drivers for the yearly increases in health care costs in Alaska. Academics, including UAA's own Institute of Social and Economic Research, have studied this issue and have assigned the responsibility for the yearly cost increases primarily to the adoption of new technology, increasing drug costs, and the obesity, diabetes and opioid epidemics. Due to anti-trust regulations, it is not possible for me to know about the fees of other orthopedic practices in Alaska. I can say that, for OPA, prior to the recent major decreases, there had been no fee increases over the last 15 years except for two very small increases to account for inflation. I would point out that for 2018 Premera raised their premiums for the group market by about 10 percent. This happened despite their having negotiated these deep discounts with various specialists. As with many of Mr Wohlforth's other assertions on health care, reality does not conform with his beliefs.
Mr. Wohlforth's series has focused on specialty physicians more than any other area of health care. This focus on a tiny corner of the Alaska health care picture does not promote a balanced discussion of the issue as a whole. I agree that decreasing specialist reimbursement is a necessary part of the solution, and that is currently happening at a rapid rate. However, Alaskans should be aware that this is by no means the sole solution, nor will it even be a major contributor. If Alaskans want to make progress on health care costs, we have to start with an accurate depiction of where we are now or we will never get to where we want to be.
Dr. Robert Hall is an orthopedic surgeon who has practiced in Anchorage for 22 years, and is currently with OrthoAlaska, formed in 2016 by the merger of Anchorage Fracture and Orthopedic Clinic and Orthopedic Physicians Alaska.
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