Owning The Future Of Ortho Ancillaries with Gerald R. Williams, Jr., MD

Want to know why some orthopaedic practices deliver faster care at lower cost with happier patients? Doug Lundy, MD, MBA, FAOA sits down with Dr. Gerry Williams, FAOA to map the strategy behind ancillary ownership—and why control, not just margin, is the quiet superpower of modern MSK care.  The heart of the episode is surgical workflow. When surgeons lead ASCs, standardization and team expertise turn operating rooms into high-performance lines: quicker turnovers, fewer complications, and lower total cost of care. Dr. Williams explains he is bullish on private practice with scale: integrated MSK groups that know their costs, invest wisely, and keep access open by diversifying revenue. 
 
If you care about the future of orthopaedic care—patient access, training integrity, ASC growth, and how to run a resilient practice—this conversation is a playbook. Subscribe, share with your team, and leave a review with the one change you’d make to your care model after hearing this. 

Transcript

Welcome And Guest Background

SPEAKER_00 0:23

Welcome to the AOA Future in Orthopedic Surgery Podcast Series. This AOA podcast series will focus on the future in orthopedic surgery and the impact on leaders in our profession. These podcasts will focus on the vast spectrum of change that will occur as the future reveals itself. We will consider changes as they occur in the domains of culture, employment, technology, scope of practice, compensation, and other areas. My name is Doug Lundy, host for this podcast series. Joining us today is Dr. Jerry Williams. Dr. Williams is a shoulder specialist at the Rothman Orthopedic Institute in Philadelphia, Pennsylvania. And is also the John M. Fenlin Jr. MD professor in shoulder and elbow surgery at the Sidney Kimmel Medical College at Thomas Jefferson University in Philadelphia. You all have heard of Dr. Williams because Dr. Williams is the former president of the American Academy of Orthopedic Surgery. He's also been the former president of the American Shoulder and Elbow Surgeons as well as the Pennsylvania Orthopedic Society. He's currently the chair of the board of directors of the Rothman Orthopedic Institute. He was the previous director of the Shoulder and Elbow Center at Rothman Orthopedics Institute. And he's also currently the chair of orthopedics at Mainline Health in Philadelphia, Pennsylvania. So, Dr. Williams, welcome to the podcast, sir. Thanks you, Doc. So good to see you here, Jerry. And good to see you too. Yes, sir. And today we're going to talk about the changes in ancillary ownership, which is an absolutely fascinating thing. And certainly Rothman Orthopedics has a significant amount of ancillary services. And this is going to be a great conversation. But first, my friend, you are the president of the AAOS, certainly a very prominent and difficult job where leadership was absolutely key. As you did your tenure throughout the presidential line, and especially your presidential year at the academy, are there any nuggets of leadership that popped out that kind of resonate?

Crisis Leadership At AAOS

Rothman’s Model And Early Career Lessons

SPEAKER_01 2:38

How long ago were you president of the AOS? 2016. It was the year I was president. I think the biggest one was actually the first day I became president, the very first day. There's a Monday board meeting at the annual meeting, which is the final meeting of the prior president. And then that next day, the next president takes over. And that was right smack in the middle of the concurrent surgery debacle with a spine spine patient up in Boston. And we were, we in meeting orthopedics, we had a pretty much a bullseye on our back because it was an orthopedic spine surgeon whom it happened to. And so the academy was getting all kinds of calls. And then one call I got was from the CEO of the American College of Surgeons. And they wanted me at the at that particular moment to agree to sign on to a policy that had been drafted by the American College of Surgeons and apparently had been signed off on by everybody but orthopedics. Wow. And he asked me if I could sign it by the end of the week. And of course, you know, I just sat in a seat for about 24 hours and it was at the annual meeting. Welcome to the show. Yeah, and if you come to find out, the whole reason he wanted it the next day is because he was scheduled to testify in front of Grassley's committee relatively shortly. He wanted to tell them that he had the entire House of Medicine signed off on this policy. And so what I told him was that the academy doesn't work that way, that we have a board that makes those decisions. I happened to be running the board at the time, but I couldn't give him that, I couldn't do it in that time frame. So I told him, I said, I'll tell you what I'll do. I'll read it myself, send it to me, and I'll read it myself. I'll read it tonight. And I'll get back in touch with you tomorrow and I'll let you know what's going on. He hadn't told me at that time that he needed it for Grassley's committee. So I called him back the next day. And unfortunately, when I read through it, and I think I'm a reasonably straightforward person. I mean, I'm not a cowboy, but there were some things in that policy that would have drastically changed the way that we teach orthopedic residency. And I don't think it was acceptable. I didn't think it was possibly, there's no way that it was going to pass through the board the way it was. So I called him, and before I told him that, I said, listen, can you tell me why you need it so quickly? And he that's when he told me about Grassley. And I said, Well, I think you got two choices. One choice is to tell him that you have this policy and you just haven't quite been able to talk to orthopedics about it yet. So we can't really use orthopedics on it. Because to be honest, we probably can't sign off on it, even if I had the board book edit. We have to work on this. I said, or you could say, listen, we haven't quite gotten this all done. We need a little bit of time. So as for an extension, they gave him 30 days. He came to the it's David Hoyt, he came to the academy office, and he, myself, Bill Maloney, I think David was there, Tisher. We spent an entire morning, maybe more than a morning, ironing it out. And it was not the most straightforward discussion, but we got to something that we both could live with and we signed off on it. And the great thing about it was it, I think it really is a better document. It makes it able, it makes us more able to teach in a way that makes patients safe and allows us to teach in an effective way. And it took the bullseye off our back because the policy came through the American College of Surgeons. It didn't come through the academy. So we immediately stopped getting phone calls. So in the span of a week, week and a half. That was my first week, week and a half at the academy.

SPEAKER_00 6:27

Like crazy. That one sticks out a little bit. That's crazy. And so what I what I heard you saying in there is you were given uh either or and you said, How about the and the and, you know, it's like this was like or this and this. How about I move to this part over here? And the third part that nobody was focusing on. Thank you for that. I know we we recently had Dr. Fercaro on the podcast, and he told us a little bit about Rothman, but can you tell us about Rothman in general and then to the point that you're comfortable to do without violating proprietary stuff on your ancillary ownerships that Rothman has?

Why Ancillaries Matter: Revenue And Value

SPEAKER_01 7:12

Sure. I think it might be interesting for people to understand how I made it to Rothman. Yeah, sure. Because I think the pathway that I took actually influences my thoughts on ancillaries and how important they are and what they do. So the first year of my practice, I couldn't find anybody to hire a shoulder surgeon. So I borrowed about$110,000 from a local hospital, hung a shingle out, went to solo private practice at one of Penn's outline teaching hospitals. And I eventually then, six months later, went to Penn and I stayed there full time for almost 17 years. And so I worked for a very long time in a system in which I was an employee in a really, really good academic center, really busy, helped me build my career terrifically. But as I got older and busier, the demands on my time and the inability to really have any control other than just working harder about making money, uh, I eventually made my way over to Rossman in 2007. And what I learned is that ancillaries really do two things. The first thing that they do is they diversify your revenue stream. And I think one of the things that I've learned in private practice, which is probably true of most businesses, if you have just one revenue stream and something happens to that revenue stream, it's a problem. So it's good to have diversified revenue streams. The second thing that it does, it just so happens that some of the things that some of the ancillary services that practices own, at least some practices, are a vehicle by which cost-effective health care can be made. So for example, we own two specialty hospitals and I think nine surgical centers now. And one of the things that's happened since I've been there is this push towards outpatient surgery. So our ASEs have become busier and with a decreased length of stay, the specialty hospitals become more important. And it's amazing to me the difference that we can offer, the difference in cost that we can offer those services to payers and still make a living. So I think it's a way that it pushes the envelope for the system to become more cost effective. And quite frankly, there are better results. If you look at all the things that have been written about specialty hospitals and ASCs, et cetera, most of them will say that the patients have a very high patient satisfaction, a low complication rate, and they're cheaper. So I think the two things that they do is they diversify your revenue stream as a practice and as a doc, and they provide a vehicle by which docs can help the system become more cost effective for patients.

SPEAKER_00 10:01

Great. That was very helpful. Thank you. What ancillary streams do y'all have?

SPEAKER_01 10:07

Well, start with the simple ones. We have x-rays in the office, MRI scans, we have physical therapy, DME stuff, braces, things like that. We got some nutraceuticals in the office that we sometimes use. Probably next step up would be things like specialty hospitals and ASCs. And we really do try, we get pressure from insurers that we do business with to provide our care in the lowest cost facility. And so the way I sort of look at it is traditional hospitals are probably always going to be the place for more complicated tertiary care things. But I really do think that bread and butter orthopedics, a large percentage of it, can be done in a lower cost environment. And so we have two specialty hospitals, and I think it's nine ASCs. And obviously we get dividends from those. But in addition to that, we do provide, I mean, our insurers ask us to do it in our places that we own as as much as we can, the ones that we talk to. So I think that's going to continue. And what I've noticed that health systems are doing, some are trying to do it, but I think it's going to be hard in a traditional health system environment without having an entire different campus or something, to their detriment. They have to take care of people in intensive care units and all kinds of other stuff. It's hard to do things as effectively as you can do it if all you're doing is orthopedics. And so I I think that's probably the next step up in terms of ancillaries. We have, you may know, that we foray into a couple of regional and national practice locations, and we have an MSO relationship with those practices. That's an ancillary, that could be an ancillary revenue stream or an ancillary cost, depending upon how well it goes. So that's one of the other things about business that I didn't really think of when I was working at Penn. But it's when you are in private practice, you do have the freedom of making your own decisions and the responsibility, but you also have the downside too. So if you decide to pick an ancillary, for example, a real estate place that turned out to go south, it's on you. I mean, it's nobody's bailing you out.

SPEAKER_00 12:20

So can you explain what an MSO is to folks who may not be as a management service organization?

SPEAKER_01 12:27

So basically, one of the things that's different about the way that we do things, there are a lot of large practices that have become large just by assuming other practices, they have the same billing number and tax ID number, but they're really not, they don't have the same back office, they don't have the same look, it's not the same feel. With practices that we have joined with, it really is one infrastructure. We have one backbone that everything runs off of, the revenue cycle, the whole nine yards. Every Rothman office, no matter where it is, looks like a Rothman office. So we really are one business. And so when we find a practice that wants to join us or we'd like to have them join us, we offer them an arrangement where we can help them with their uh back office things. So we can help them maybe even with their contracts, depending upon where they are. We can help them run their business. And obviously, for that, there's a percentage fee that we take.

SPEAKER_00 13:25

Okay, very good.

SPEAKER_01 13:26

And that gets that that money gets divided evenly among shareholders, which is why I look at it as an ancillary.

SPEAKER_00 13:32

So speaking of shareholders, can you give us a brief overview of the structure of Rothman? How many folks y'all have, the shareholder track, as much as you can tell us?

MSO Structure And True Integration

SPEAKER_01 13:42

Yeah, I'm trying to figure out. I think the number of docs that we have now, total docs, we have both orthopedic surgeons and non-orthopedic surgeons. So we have some PM and R docs that do sports medicine, we have primary care physicians that do sports medicine, we have some podiatrists, so it's not all orthopedic surgeons. So I would say, and we have a lot of uh APPs. So if you count all the providers, including docs, it's probably in the neighborhood of 260 somewhere in that ballpark. And I think we have 69 shareholders at this point, and there are various levels of shareholders, and they're divided by certain things. So, for example, the first would be orthopedic surgery shareholder, a non-surgery shareholder. That would be sort of the first one. The second one, you get a little bit of a bump uh for being academically productive to a certain level. We keep track of points, we call them ACC points that have to do with how you contribute to the practice. And one of those ways is with academic productivity. And so academic productivity at a certain level puts you at the highest level of shareholder position. And we have a lot of associates that aren't shareholders, and quite frankly, there are some that are perfectly happy to be associates. If you look at what our associates make in comparison to what other people make in the same geographic area for what they do, they're on the 90th, 95th percentile. So some of them are perfectly happy like that. And to be honest, I can understand why. I'll never forget the meeting when Mike West was still here when COVID first started. I've been on the board, I've been fortunate enough to be on the board for a long time. And we had an emergency meeting and Mike West, I'm paraphrasing, but it went something like this This is the level of fixed assets or fixed expenses that we have. We cannot get rid of them. We have to pay these expenses every month, no matter what we do. We have other expenses we can try to get rid of, but this is our fixed expenses. This is what our revenue per month was now. This is what it is now, and we have no idea how long it's gonna last. So if we assume that this is gonna continue for a significant period of time, if we don't get rid of 30% of our costs, we'll be out of business in 90 days. Wow. You know, the bottom line is when you're working at an institute, and most of the academic institutions around Philadelphia didn't cut any of the salaries to anybody. They didn't fire anybody, they didn't get rid of anything. And so they got money from the government for COVID for a while, but when that stopped, they're still catching up. We took a lot of heat for downsizing our the size of the people who worked for us in COVID. We took in the newspapers on TV, you name it, we got hammered. But I'll be honest with you, if we hadn't done that, we might not be here. We can't we came out of COVID hurt like everybody else, but I think we started from a better place and we had got, you know, everybody I think had some negative trends before COVID. COVID put them on steroids, and the same was true for us. The difference between us and some other people is we recognized that, and we got as rid of as many as we thought we could of our negative trends so that when we came out of COVID, we were in a better position.

SPEAKER_00 16:57

That is fantastic. That's a great reminder of that and how bad that affected everything at that time. So that's a great overview of Rothman and what y'all own there. Let's talk about the future of these ancillaries. Let's start with imaging. So we have X-ray and MR in there. Do you guys have CT or DEX or anything like that? No, not yet.

SPEAKER_01 17:21

Let's put it down there.

SPEAKER_00 17:22

One CT scan at Resurgence for the footnote guys with a standing CT thing, but never quite understood that one. But so let's put MR and playing films in there. How do you see ancillary ownership and profitability and sustainability being as far out as you can look out? 10 years plus whatever you think it'd be. What does the future hold for ancillary ownership in terms of imaging in the orthopedic practice? Because a lot of you don't have to be a mega group to have to have ancillary, I mean have imaging, right? Absolutely not.

SPEAKER_01 17:57

So let's first start off with an assumption.

SPEAKER_00 18:00

Okay.

SPEAKER_01 18:01

And the assumption is 10 years from now, we're still not going to be a single payer. Let's assume that's true.

SPEAKER_00 18:06

Yeah, let's assume that. Sure, sure.

Shareholders, Incentives, And COVID Shocks

SPEAKER_01 18:07

Okay, because it may not be, but let's assume it is. I personally think it I think it is true, but it may not be. No, no, I do not think we will be. Okay, okay. But I could be wrong. Let's assume that we don't have a single payer. The problem we have is the demand that we have for our services, including ancillaries, maybe even especially ancillaries, as time goes on, it's going to get larger and larger and larger. And the dollars are not going to get larger any way I can see. So there's going to be a downward pressure on physician reimbursement, hospital reimbursement, ancillary reimbursement. So I think what practices are going to have to do, I can't speak to hospital to hospital systems, but I think what practices need to do is realize that they absolutely need an ancillary revenue stream of some kind to so they can diversify the revenue. That will become even more important as time goes on. But some of the things that we have now that we would consider ancillaries might not be good ancillaries in the future. For example, some of the real estate we own, we actually built. Okay. I'm going to argue that with everything going towards outpatient and trying to get your costs down as low as you can, building or owning bricks and mortar in the future for practices may not be as smart as it was at one point in time. So we might be looking at not being real estate owners as much as we are now. And I personally think that that's probably going to be the case. And I would say the second thing is we're looking at other things now that you wouldn't consider traditional ancillaries because we believe that the ancillary revenue business is like every other business. There will be new things that come along, there will be current things that drop off, prices will change. So I think it's important that you keep your ear to the ground and find other things. So for example, things in alternative medicine. We don't have anybody in our office doing acupuncture at this point, but I think we probably will. Things like, and I think we need to do it scientifically. That's one of the things that we try to differentiate ourselves with. If we're going to get into the alternative medicine business, we're going to study it. We're going to see what happens in comparison to placebo and other things. But I think it's going to be things like injectables, acupuncture, certain types of dressings, collagen dressings, for example, that may be good for certain kinds of wounds. There are things that we probably haven't even thought about yet that could be ancillary revenue streams. And we actually have a committee. It's run by a guy named uh Joe Abud, who's one of my partners on the uh shoulder division, who's put, who's been put in charge of finding new ancillary revenue streams and vetting them out. Uh doing a we do a business plan on all of them. So we see that the ancillary, I don't think what you want to do is sit tight with your current ancillary stream and just hope it doesn't get too bad. Um, I don't think that's a good strategy. I think it's a popular strategy, I'll bet, but I don't think it's a good one.

SPEAKER_00 21:09

Yeah, I met Joe recently at the OSET meeting in Las Vegas. What's the future you think of imaging then, of owning imaging services, whether X-ray and or MR?

SPEAKER_01 21:18

I think for X-ray, I think orthopedic surgeons that are in private practice have to have one of the reasons to own it is to have control over it.

SPEAKER_00 21:26

Exactly.

SPEAKER_01 21:27

If somebody asked me, what were the 10 reasons that I left a full-time academic program and came to private practice at Rothman, the first 10 were control. Let's say you get a bad x-ray in your office and you want to send somebody back to get a new axillary view. If you worked in a hospital system where the x-ray department might not even be on your floor, or if it is, they're not just doing orthopedics, they're taking chest x-rays and everything else. It's just not a good deal for the patient. It's not a good deal for you. It screws everything up. So I think imaging is always gonna be done. I think it's always gonna be done. MRI scan, I'm not sure, because MRIs are getting to be so cheap anymore. And I don't think the prices of the magnets have come down that much. I think it's gonna be a business decision. We'll always need one nearby or have a relationship with somebody, but we're gonna be very careful. That's why I think it's very important that you do a business assessment of any ancillary that you currently have and any ancillary that you think you want to have, because you might find out in the future that some of the things that you use right now that you don't necessarily need immediate control over, don't allow you to provide the cost-effective care that you would like to. And let's face it, for us in private practice, the way that we think about that is patient access to care. We think of the things that threaten ancillary revenue and threaten our ability to have a diversified revenue stream, threatens our ability to provide the same level of care and the same access to patients who want to see us. So I think ancillary revenue really is important for all those reasons. And so I think that MRI, that's one of those things that I'm not sure. That's the way we felt about Cascan. Unless Cascan comes up with another use that's so critical that we have to have access to it a lot and frequently, we might not, we might have a relationship with a group, but we may not own as much as we currently own.

SPEAKER_00 23:20

What you said to me was extremely interesting. You basically said that you are maintaining ownership of X-ray. You don't want to lose money on it, of course, but regardless of how little it makes, because of the control that it gives you over direct patient care and the convenience to patients knowing they don't have to go a block and a half away to get a simple shoulder series come back, and then you have to repeat the axillaries and all that. So that's absolutely but MR is not necessary. You can make a relationship if the business got to the point to where you were break-even or even to the point where the risk of owning your own magnet was not worth the money you made. You could just get a relationship with another MR somewhere and uh try to funnel as much businesses you can that way to make sure that they followed your protocols and did that, right? Correct. Yes. All right, cool. How about DME? Braces, boots, splints influence.

SPEAKER_01 24:13

That's a that's another one that's similar.

SPEAKER_00 24:16

Okay.

SPEAKER_01 24:16

A lot of the braces that we use there for post-surgical patients or patients with fractures. It's convenient for the patient to leave your office having scheduled surgery with a DMA that DME that they need and that you want them to have. And one of the things that we I told you that Rothspin Recover website. Some patients don't like the slings. They say these seem to be a little flingy. We just say, look, why don't you go to this website? This is a website that we do have some ownership in. May not be covered by your insurance, but if you found something you like, you can use it. So we think I think control of the DME is also important. You're not going to get rich on DME. I think that you can provide a very good environment for the patient and a good experience for the patient, which in the end does make you more money and it gets you a better reputation for taking care of patients.

SPEAKER_00 25:03

If you're a football person, you can make sure you have the correct orthotics, not an orthotic that you got off of the web. Correct. We choose we choose them. Yeah. Specific orthotics that you wish to have on there. Now, let's take us a weird look at this. Because you were president of the academy, I was the chair of the council on advocacy. So both of us understand the impacts of that. And the American College of Radiology, in so many words, wants control over our magnets, right? And the APTA, the American Physical Therapy Association, has come out and said that physician ownership of or POTS physician-owned therapy services is not ethical, and they don't think that we should have control over therapy. So we have two groups right there and then that are saying that there's a conflict with us owning these ancillaries, and they are against us doing it. Any thoughts specifically on physical therapy? Because as you know, South Carolina, not too long ago, was trying to enact a law. I'm not sure if it completely went through. They outlawed POTS. And of course, we have the ongoing all my magnets when I was at Resurgence, I always had to sign off on the ACR validation or verification of the magnets. And without that, we had to shut the magnet down. Any thoughts on the competing interests or the other outside entities that believe that it's outside our scope of practice and would try to get those ancillaries from us?

SPEAKER_01 26:29

So, what's interesting to me, I have great relationships with physical therapy. Can't do shoulder surgery and not have a great relationship with therapists. And a lot of them are some of my best friends. Absolutely. The bottom line is they go to Washington, D.C. and they argue that a patient should need a prescription to see them. So how much of a conflict of interest is it for them to own the physical therapy facility and facilities that could have nine or 10 of them and be able to write their own prescription for their patients to come see them for as long as they want to. You could make this argument any way you want. Okay. But the way I like to look at it, what's best for the patient?

unknown 27:05

Okay.

DME Ownership And Patient Experience

PT, Radiology Politics, And Advocacy

SPEAKER_01 27:05

That's the way I like to look at it. So I really don't think it's right for therapists who they've been trained, don't get me wrong, but they don't know as much about disease as they should to be able to prescribe physical therapy to patients, particularly post-injury or post-surgically. So I think that has to be a doc. Okay. The bottom line is the way that I would argue it is you're looking out for your patient's best interest. You know what you did surgically, you know what the injury they have, you've been trained on those two things. And obviously we teach physical therapists about it all the time, but they don't have the same level of training. They, I think they sometimes have maybe always have a PhD after their name, but they didn't go to medical school for four years, internship for one, residency for four, fellowship for one or two. So the bottom line is if you look at the person who is most able to look out for the best interest of the patient, it's the doc. And the doc's not providing the physical therapy. The doc is making an owning a place that has an environment that hopefully the physical therapists who work there don't have to worry about some of the other things they would have to worry about to own a business, worry more about physical therapy and provide better care for the patients. The way that I would argue it, I think both models should exist. The one that works best is the one that will win out. And so that would be my answer to physical therapy. And I'll tell you, you know, I'll give this much other argument with radiologists. There's entrepreneurs in every field. So the entrepreneurs in physical therapy are trying to figure out a way to do something on the internet or do or do remote monitoring physical therapy and cancel out all of their all their brethren. Right? So entrepreneurs are everywhere. We've had multiple of those physical therapy entrepreneurs come to our practice and work with us that want to put up a therapy program that you don't even have to see the therapist. You just have some videos, Zoom calls, things like that. So that's number one. We'd be happy to help them with that. The second one is we recently had somebody come to us. They're, I'm not going to say what system, but they're a radiologist, a full-time employed radiologist in a system. And apparently there's a new magnet out that's very small, provides good images. You can put it in an office easily. And they want to be our radiology people in our offices with that magnet for a price. The point I'm trying to make is there are entrepreneurs everywhere. Okay. We do have battles to fight, and we should keep fighting them. But don't ever underestimate entrepreneurism. It's everywhere. And a lot of times it provides things that are better for the patient and better for the system, cheaper, et cetera. So I'm an optimist. I think that we don't get me wrong, we have to be involved in advocacy. It's very important. We don't do enough of it. You know, I think that way, and I know you do. But the bottom line is that's one battlefront. Battlefront is looking for opportunities.

SPEAKER_00 30:03

Right, right. So are you bullish on the future of image? I'm sorry, of therapy ownership in the future.

SPEAKER_01 30:11

Well, so far, it again, unless you're a business, some of these physical therapy places that have nine, 10, 12 offices regionally, they're making good money. They sell to some private equity group, they make a lot of money. That's we're not doing that. We have a mostly affiliated with our offices. So we're never going to get ancillary revenue out to Wazoo for physical therapy. It helps. It's a piece of the pie. But we try to focus on orthopedic surgery and musculoskeletal medicine. We're not physical therapists. If somebody, if some physical therapist came to us, just as nobody has, but let's just say somebody did. Listen, I want to break away from my physical therapy group. I'd like to open up 50 offices in the Delaware Valley, but I'd like to put Rothman Institute on it and I'll run it for you. But I got contacts and this is what it's worth. Can you help me? We probably listen to them. Right. Why not? Sure.

SPEAKER_00 31:02

Okay, very interesting. Let's get to the big one. ASCs. Hospitals are very interesting. I don't think there's too many of them out there, but there's ASCs all over the place. So for those of y'all unfamiliar with the acronym, it's ambulatory surgery centers. And you said y'all own about nine ASCs? Yeah. Are they are is those are those all C O N or No, some are not. Okay, very good.

SPEAKER_01 31:27

I don't even know where the no ones that are not are, but some of them are not. We only have one in Florida, one or two in Florida, I think, but they're not all certificate in eight, I don't think.

SPEAKER_00 31:36

Okay. How many do y'all have up here in Pennsylvania?

SPEAKER_01 31:41

Probably if you include Pennsylvania and South Jersey, that's probably nine.

SPEAKER_00 31:46

Okay.

SPEAKER_01 31:47

There's maybe some additional ones in Florida.

SPEAKER_00 31:50

And uh when we opened our orthopedic hospital here at St. Luke's, I took my entire OR staff. Y'all were so gracious, I took my OR staff down there because I knew that they were going to run their new hospital like a hospital. And I said, I want y'all to run this place like an ASC, and I'm gonna show you. I was gonna stick them on a plane and carry them back down to Atlanta, but I realized that I had a phenomenal group just south of here, and a bunch of my friends who were at Rothman allowed me to carry them in there and show them, and they were blown away at the efficiency, high care, the high patient satisfaction, and the efficiency in Rothman's ASC. And I just smiled, I'm like, I knew what we were gonna get. I've never been here before. I knew this was the way it was gonna be. That's why I gambled on it and I knew it was not a gamble. I knew that y'all were gonna come through, and they were like, we had no idea. I'm like, yeah, I know, but in their defense, they had never seen anything like that before. What's the future of ambulatory surgery center ownership?

ASCs, Specialty Hospitals, And Efficiency

SPEAKER_01 32:45

For the reason that you just said, very bright. Okay. One of the things that we never get credit for, never get credit for. People tell us that we own ASCs and we own specialty hospitals because we're greedy and we want the money. And look, if there was no money in it, we couldn't do it. So I'm not saying there's no truth to that. But what we really do better than they do is we run it better. When I worked at Penn and I loved Penn, if I had to start over my practice again, I'd probably start in the same place. My career did great with it. I learned a lot there. It was a great place to learn. But when you get to a certain point in terms of busyness at a point in your life, you need a little more efficiency in your life. And I knew that it was better when I left. I had no idea how much better it was. And I think it boils down to a few things. So in an ASC and in our specialty hospitals, how many times have you said to a hospital that you've worked at, that's a traditional hospital, rather than having a group of people who work in the operating room who sometimes scrub with me, sometimes scrub with GYN, sometimes scrub with general surgery. They do that because they say when people take call, they have to be able to take anything. And I always tell them, what you are guaranteeing without question, is that you will never have an expert scrub person in anything. You can't be an expert that way. And at our specialty hospitals and our ASCs, they do nothing but us. When I first came to Jeff, I went to one of their hospitals, Methodists, it was a Jefferson hospital, and John Fenlin and Mark Lazarus, I don't know how they did it, they put together a program down there where in the operating room we had our own teams, shoulder and elbow. They came to the hospital and we came in the morning. They left when we left. We had our own nurses, our own floor. It was the best medicine I ever practiced. I was doing a video shoulder replacement one time, and I had the best scrub nurse, I had the best nurse first assist, and I had a fellow. And I said to the scrub nurse, I don't know why I said this, I was just curious. I said, Let's try something. You know, this is a video. I'm gonna ask for the knife, and I'm not gonna ask for anything else until I have to. And I went the entire case without asking for anything but the knife.

SPEAKER_00 35:05

How about that?

SPEAKER_01 35:07

I had a guy who saw that video call me and said, Was that real? Or did you like spice? I said, honest to God, that was real. And so we don't get we don't get credit for that. Okay, people don't really understand. If you put a doc in charge of the workflow, you put a surgeon in charge of the surgical workflow, you're gonna get a Ferrari. It's just the way it is. That's why there will always be ownership of ASEs. We as docs are never gonna let anybody else control the way that our operating room works, it's never gonna happen unless somebody makes us do it.

SPEAKER_00 35:43

Because it just works too well. Well, let me ask the overlying question then, as uh file, there's the one of our final questions here. I think this sums the whole thing up. For ancillary ownership to survive, private practice has to survive. That's the that is the truth. Tell us, tell us what your thoughts are.

Private Practice Survival And Scale

SPEAKER_01 36:05

Well, it goes back to the thing that I said at the beginning. So ancillary revenues right now are with private practitioners, and as a result, they result in cost-effective care. We use it to make money, but we also use it to keep costs down so we can drive patients through a lower cost care experience because that's what insurers ask us to do. Unfortunately, I think at most hospital systems, it can't work that way. There are too many other variables on the way. So I'll give you an example. So when I was still at Penn and I was chief of orthopedics at Presbyterian Hospital, they asked me to be involved in they they would have a contract negotiation with IBC or whatever insurer they were going to have a contract with, they go over all the contracts for everybody at the health system, not just orthopedics, everything. And my little piece was they wanted me me to be involved in getting good prices for things that you do arthroscopic cuff repairs with, like anchors and things like that. Sure. So I spent a month trying to get somebody to tell me what it costs them to provide a rotator cuff repair. You'd think that's a simple question.

SPEAKER_00 37:15

Yeah.

SPEAKER_01 37:16

I couldn't get an answer. So I finally said to them, How in the world do you expect to negotiate with an insurer that has all your numbers too for a price that you can make money on if you don't know what it costs you to make it? What are you thinking? They got a million excuses how you divide up air conditioning, how you divide up electricity. I don't know, but figure out a way. Okay, I can tell you that any other business figures out a way to figure out what their costs are to provide something, or they don't provide it. So, from my perspective, that's the way our hospitals and ASCs work. There's no way in the world somebody's going to bring a product into an ASC without us knowing exactly what it costs, what it costs us to provide the care, what our margin is. It's never going to happen. And that's why I think ancillary revenue streams will always have something to do, mainly mostly to do, with private practice, because we run things like a business, and so do the people that provide the ancillaries.

SPEAKER_00 38:19

It sounds like you're bullish on the future of private practice as well.

SPEAKER_01 38:22

I am. Good. I am. I think it'll look different. But I am bullish on it. I think unless you're in a rural area that doesn't have a lot of access to care, you're going to have to be part of a larger group, probably geographically large, that maybe even provides more than just orthopedic surgery, you know, musculoskeletal medicine. I think it's going to be hard for eight, 10 men group in a big metropolitan area. I think it's going to, I think the revenue and cost structure is going to be hard to monetize without a certain size. But I am bullish on private practice, and I am because I think large groups have shown that we're good at it. We're good at providing cost-effective care and running a business that's profitable. And that's what you have to do.

SPEAKER_00 39:11

What you've been talking about the entire time we've been discussing this is that leadership is absolutely essential and key. Because without leadership, all this falls flat, everything goes broke, and the whole house of cards falls. That's true.

Leadership Realities And Closing

SPEAKER_01 39:28

And you know as well as anybody, Doug, leadership is sometimes fun, but sometimes it's not that fun. No, you know, and trying to herd, you know, 69 partners and all the rest of the people that work with us into a group that is always rowing in the same direction is a real challenge. And sometimes it requires a bat, and sometimes it requires some sugar. So leadership is a mixed bucket, and you just have to figure out how to keep yourself grounded on what's important and headed in the direction that's important for your organization. And that's sometimes easy and sometimes hard. As you know, I'm not telling you anything you don't know.

SPEAKER_00 40:10

Well, that is a great note for us to conclude on. It has been an absolute pleasure discussing the future of ancillary ownership with Dr. Jerry Williams, who is chair of the board at Rothbard Orthopedic Institute and former president of the American Academy of Orthopedic Surgeons. Dr. Williams, thank you so much for being on the podcast, sir. Thank you, Doug. It was fun. Yes, sir. And y'all stay tuned for future episodes in this podcast channel.