1. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Prepared by DT Research LLC Prepared for AAOS Marketing Department and the Department of Society Relations March 2012

2. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 The Department of Society Relations sought to investigate the impact of state orthopaedic societies (SOSs) and SOS membership in the lives of hospital-employed orthopaedists. As a result, AAOS Marketing developed a multi-pronged study consisting of feedback from SOS leadership and State Society members: Phase 1: 2011 Annual Meeting focus group among hospital- employed Fellows Phase 2: Online survey of SOS leadership Phase 3: Online survey of AAOS members 2 BACKGROUND AND OBJECTIVES

3. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Phase 3 member survey is the subject of this presentation –Phase 1 and 2 findings are included where they overlap. Phase 3 objectives: –Identify key programs/activities SOSs should develop to enhance relationships with members –Confirm members opinions, needs, and level of satisfaction with their SOSs –Determine opinions, needs of non-SOS members –Identify unmet needs –Determine likelihood of future SOS membership among existing and current non-members –Confirm/uncover issues facing hospital-employed orthopaedists –Identify resources used by hospital-employed orthopaedists in contract negotiations 3 BACKGROUND AND OBJECTIVES

4. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 METHODOLOGY AAOS emailed survey invitations to a random sample of 3,500 Active U.S. Fellows and Candidate Members Emails included a link to complete the survey online 417 respondents completed surveys representing a 12% response rate Results are based on 95% confidence level, +/-4.8 percentage points 4 CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012

5. 5 Average age: 55 Average number of years in practice: 22 years Respondent Practice Settings N=417 Q1: Which of the following positions best describes your orthopaedic practice setting? RESPONDENT CHARACTERISTICS

6. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 6 HOSPITAL CONTRACTUAL ARRANGEMENTS

7. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 (N=205) 7 The most valuable benefits according to hospital-employed survey respondents reflect Annual Meeting focus group sentiments. Q5: The following are potential benefits of hospital employment. Please rate their value to you (5=Very valuable -1 Not at all valuable). BENEFITS OF BEING HOSPITAL-EMPLOYED

8. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 (N=8) 8 Co-managers value most control over their practice environments. Q5: The following are potential benefits of co-managing a hospital ortho dept. Please rate their value to you (5=Very valuable -1 Not at all valuable).. BENEFITS OF CO-MANAGING A HOSPITAL ORTHOPAEDIC DEPARTMENT

9. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 9 Of the potential difficulties tested, both hospital-employed and co-manager respondents find that hospital bureaucracy and dealing with administration prove the most challenging. Q6 & 8: The following are potential difficulties of (hospital employment/co-management.) Please rate the degree to which they have proven to be challenging to you (5=Very Challenging -1=Not at All Challenging). CHALLENGES OF HOSPITAL ARRANGEMENTS

10. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 10 Q3: Overall, how satisfied are you with this contractual arrangement (5=Very Satisfied - 1=Not at All Satisfied)? SATISFACTION WITH CONTRACTUAL ARRANGEMENT While many respondents obtained legal counsel to aid with hospital contract negotiations (130 mentions), there is a notable portion of respondents who did not (51 mentions). Nevertheless, respondents are generally satisfied with their contracts.

11. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Hospital-employed orthopaedists may feel insulated from the repercussions of decreasing reimbursement models, and less engaged in legislative dialogue. While satisfied overall, hospital-employed respondents acknowledge difficulty in dealing with hospital bureaucracy and conflicts with administration. Contracted orthopaedists sought legal counsel, but many entered into their arrangements without any professional preparation. 11 CONCLUSIONS HOSPITAL CONTRACTUAL ARRANGEMENTS

12. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 12 RELATIONSHIPS WITH STATE ORTHOPAEDIC SOCIETIES

13. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 13 MEMBERSHIP IN STATE ORTHOPAEDIC SOCIETY Membership in their State Society is nearly equal for both hospital-employed (67%) and non-hospital employed (70%) respondents. However, on average, non-hospital employed respondents are more satisfied than their hospital-employed physician counterparts. Further, a significant faction is neutral with regard to SOS membership. Satisfaction with SOS Membership All SOS Members (%) Hospital- Employed (%) Non-Hospital Employed (%) Average satisfaction rating 3.53.23.8 5-Very Satisfied 16824 4 312736 3-Neutral 425133 2 675 1- Not at all Satisfied 572 N285154131 Source: Q10 Overall, how satisfied are you with membership in your State Orthopaedic Society?

14. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 14 Q11 How likely are you to join or maintain membership in your SOS within the next 3 years (5= Very Likely- 1 =Not at all Likely)? MEMBERSHIP IN STATE ORTHOPAEDIC SOCIETY Current State Society members are more likely to maintain their membership in the next three years. However, those who are unlikely to maintain membership cite receiving adequate CME from other sources such as AAOS (64 mentions), hospital (32 mentions), or subspecialty (27 mentions) as reason.

15. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Priority of Medical Association Membership (1=Highest Priority) All Respondents SOS MembersNon-SOS Members AAOS 1.4 1.3 National Orthopaedic Subspecialty Society 2.82.92.6 State Orthopaedic Society 3.53.34.1 State Medical Society 4.54.44.7 County Medical Society 4.94.85.0 American Medical Association 5.96.05.7 N 417 285132 Source: Q13 The following are six professional medical associations with an option to add a seventh. Please rank order from 1 to 7 in terms of priority of membership to you where 1 means highest priority and 7 means lowest priority. 15 MEMBERSHIP IN STATE ORTHOPAEDIC SOCIETY Respondents prioritize membership in six associations (with an option to add a seventh). Membership in a SOS ranks in the middle, while AAOS consistently ranks first. Further, non-SOS members give higher overall priority to membership in a subspecialty society, and lower overall priority to SOS membership.

16. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 IMPORTANCE OF SOS BENEFITS: (5=Very Important and 1=Not at All Important) All SOS Members SOS Leadership Survey Respondents Hospital- Employed SOS Members Non-Hospital Employed SOS Members Legislative advocacy3.74.43.54.0 Solidarity with orthopaedic peers3.54.03.33.8 Information on legislation and regulation changes3.54.43.33.8 Networking3.23.93.13.4 Scope of practice advocacy3.14.13.03.3 Workers Compensation advocacy3.14.02.83.3 Annual Meeting3.04.02.83.1 Pay-for-call advocacy2.83.22.73.0 CME2.83.62.72.9 Mediation with third-party payors2.62.82.32.8 Practice management education2.53.12.32.6 Legal/ contract assistance2.42.62.32.6 Job postings2.22.12.32.0 N19311111083 Source: Q14: Please rate the importance of the following benefits of membership in your SOS. SOS Leadership Survey Q8: Please rate the following member benefits 16 Legislative advocacy is the most important SOS benefit. Close behind are solidarity with peers and information on changes in legislation and regulation. Non-hospital employed SOS members find benefits related to reimbursement issues to be of greater importance.

17. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Hospital employment of orthopaedists may not pose a near-term threat to SOS viability, as several current SOS members are likely to maintain their membership within the next three years. But non-hospital employed SOS members are more satisfied with SOS membership. And a significant faction of members are neutral. Orthopaedists who join professional organizations for CME may be disappointed with/ unlikely to join a SOS. The most important SOS benefit is legislative advocacy, placing membership in a SOS behind educational organizations such as the AAOS and orthopaedic subspecialty societies. There is a gap in perception of the relative importance of SOS member benefits between SOS leadership and members, especially hospital- employed members. 17 CONCLUSIONS RELATIONSHIPS WITH STATE ORTHOPAEDIC SOCIETIES

18. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 18 CHALLENGES TO THE ORTHOPAEDIC PRACTICE

19. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 IMPACT OF ENVIRONMENTAL PRESSURES: (5=Significant Impact, 1=No Impact at All) AAOS Member Survey Respondents SOS Leadership Survey Respondents Hospital- Employed Respondents Non-Hospital Employed Respondents Uncertainty of Medicare reimbursement rates 3.94.43.74.1 New ICD-10 coding 3.73.83.63.7 Payor requirements for evidence-based practice 3.6 3.53.6 Medicare Accountable Care Organizations (ACOs) 3.53.63.5 Data collection for clinical outcomes 3.4 Medical liability insurance rates 2.73.32.53.0 Changes to Stark self-referral and fraud and abuse laws 2.43.62.32.7 Pressures to become hospital/ academic center employees 2.43.92.22.8 Pressures to affiliate with large group practices 2.43.72.12.7 N379111217162 Source: Q17 Within the next three years to what extent will the following environmental pressures impact your practice? SOS Leadership Survey Q11. To what extent will the following pressures impact orthos in your state? 19 Most respondents concur that Medicare reimbursement rates will have the most impact on orthopaedic practices within the next three years. In general, the top five anticipated environmental pressures are similar, regardless of respondent type. However, hospital- employed respondents are less inclined to rate liability insurance rates, Stark, and pressures to affiliate as challenges that will significantly impact their practices. IMPACT OF ENVIRONMENTAL PRESSURES

20. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 IMPACT OF ENVIRONMENTAL PRESSURES: (5=Significant Impact, 1=No Impact at All) SOS MembersNon-SOS Members Uncertainty of Medicare reimbursement rates 4.13.4 New ICD-10 coding3.83.3 Payor requirements for evidence-based practice 3.73.3 Medicare Accountable Care Organizations (ACOs) 3.63.3 Data collection for clinical outcomes 3.53.1 Medical liability insurance rates 2.82.6 Changes to Stark self-referral and fraud and abuse laws 2.62.1 Pressures to become hospital/ academic center employees 2.71.9 Pressures to affiliate with large group practices 2.62.0 N285114 Source: Q17 Within the next three years to what extent will the following environmental pressures impact your practice? SOS Leadership Survey Q11. To what extent will the following pressures impact orthos in your state? 20 On virtually every issue, SOS Members expect greater impact on their practices, compared to non-SOS members: IMPACT OF ENVIRONMENTAL PRESSURES

21. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Hospital-Employed (%) Non-Hospital Employed (%) ObamaCare/ Reimbursement models 1924 Aging orthos/ partners54 Insufficient hospital reimbursement 50 EMR/EHR implementation/ Requirements 47 Retirement 47 Burdens imposed by regulatory rules/ requirements 15 No Other Challenges53 Total Mentions11591 Source: Q18 What other challenges will impact your specific orthopaedic practice within the next three years? 21 ADDITIONAL PRESSURES/CHALLENGES Both hospital-employed and non-hospital employed physicians fear ObamaCare/ reimbursement models pose a challenge to the future of their practice.

22. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Regardless of practice setting or SOS membership status, income optimization is a primary challenge for these respondents. This challenge manifests as Medicare rate uncertainty, coding and evidence-based practice requirements, or ACO implementation. Although income optimization and reimbursement are issues for all, the degree to which orthopaedists experience environmental pressures varies by respondent segment, with SOS members and non-hospital employed respondents expecting greater impact on their practices. 22 CONCLUSIONS CHALLENGES TO THE ORTHOPAEDIC PRACTICE

23. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 23 RESPONSES TO CHALLENGES

24. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 The table on the following slide lists specific issues respondents could face and the organization-AAOS, SOS, Both or Neither-from which they would seek assistance. In every instance the proportion of respondents who would seek out the AAOS alone is greater than the proportion who would seek assistance from a SOS alone. Between 20% and 38% of respondents, depending on the issue, would consult both organizations. Between 43% and 50% of respondents would consult neither organization for education on any type of contract negotiation. 24 SEEKING ASSISTANCE

25. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Meeting Specific Challenges: Organizations Respondents Would Utilize AAOS (%) SOS (%) Both (%) Neither (%) N Education on the impact of changes/reforms in health care on member practices, and tactics for coping with these changes 51<13810407 Courses/ product offerings specific to hospital- employed orthopaedists 4422726404 Practice management programs/ services 3333627404 Education on contract negotiation for co- management of a hospital orthopaedic department 3142244399 Education on establishing/participating in an ACO 3143432399 Education on negotiation of a hospital employment contract 3032443403 Education on dissolution of contractual relationships 2832147398 Education on contract negotiation for joining a group practice 2452050403 Mediation of billing problems with carriers and bill review companies 19152442404 Source: Q19 The following are potential measures that the American Academy of Orthopaedic Surgeons or your State Orthopaedic Society could take to assist you in meeting potential challenges. From which organization are you likely to seek assistance? 25

26. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Requested Product Offerings Specific to Hospital-Employed Orthopaedists Hospital- Employed (%) Non-Hospital Employed (%) Contract Negotiation 1710 Working with Administration/ managing expectations, conflicts 86 Management/expansion/ marketing a hospital-employed practice 60 Salary/reimbursement data 60 Costs vs. outcomes of devices/imaging/procedures 50 Call responsibility/payment 50 None 1110 Total Mentions 65 52 Source: Q20 Please specify the courses and product offerings specific to hospital-employed orthopaedists that would be of interest to you. 26 NEEDS AND REQUIREMENTS Both hospital-employed and non-hospital employed respondents request courses on contract negotiation and on working with hospital administration. Hospital-employed respondents are also interested in database development: Salary/reimbursement data Costs vs. outcomes of devices/ imaging/ procedures

27. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Requested Practice Management Programs and Services Hospital- Employed (%) Non-Hospital Employed (%) ICD-10 coding/reimbursement optimization 1415 Contract/fee negotiation issues 1110 Personnel/PA management 80 Management of: ortho dept./ clinic/ solo practice/ group practices 65 Income: reimbursement/ compensation data 60 Development of ACOs 05 Practice efficiencies 05 Total Mentions3641 Source: Q21 Please specify the practice management programs and services that would be of interest to you. 27 NEEDS AND REQUIREMENTS Respondents most frequent practice management program requests involve income optimization. Programs on coding/ reimbursement optimization and contract/ fee negotiation receive the most respondent mentions. Both hospital-employed and non-hospital employed respondents request programs on management in a variety of practice settings.

28. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 AAOS emerges as the go-to organization for education to address environmental pressures, particularly from an overall perspective. But SOSs may better serve in addressing practice-specific issues. The findings suggest the potential for niche programs/services to address the needs of smaller factions of hospital-employed and non- hospital employed orthopaedists who would seek assistance from either organization. 28 CONCLUSIONS RESPONSES TO CHALLENGES

29. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 29 RECOMMENDATIONS

30. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 The following recommendations are suggestions based on the current research. AAOS and SOS managements must take into consideration economic and other organizational issues beyond the scope of this research to determine their feasibility and suitability for each organization. SOSs may consider providing mediation services with insurance carriers and bill review companies. Although it is of minor importance in relation to a SOSs advocacy benefits, it is a service that addresses the needs of its non- hospital employed member base. There is a segment of both the hospital-employed and non-hospital employed respondents who request courses/ products on contract negotiation and who would likely avail themselves of these services for initial or re-negotiated contracts. These product offerings might also prove useful to respondents who used no outside resources in hospital contracting. 30 RECOMMENDATIONS

31. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Some respondents acknowledge they discussed their upcoming contracts with other physicians and friends who had experience. Consider an interactive panel discussion (perhaps online?) of physicians who are hospital-employed and/or co-manage hospital orthopaedic departments to provide input into the contracting process, the process of moving into hospital employment from private practice, and their experiences with their contractual arrangements. There is a faction of hospital-employed orthopaedists who request courses on practicing in a hospital-based environment: implementation of ICD-10 and EMR, call responsibility and payment, management/ expansion/ marketing of a hospital-based practice. 31 RECOMMENDATIONS

32. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Consider courses for both the hospital-employed and co-managers of hospital orthopaedic departments on working with hospital administration, understanding differences in budgeting, revenue/expense generation, equipment, and staffing required in a hospital setting, etc. SOSs, or the AAOS in conjunction with state societies, may consider research among administrators/ staff of hospital systems which employ orthopaedists to investigate their experiences. Do administrators need to be educated regarding the nuances of working with orthopaedic surgeons vs. primary care physicians? Are there ways orthopaedist contracts can be customized? Do orthopaedists require better preparation for this experience? 32 RECOMMENDATIONS

33. CONFIDENTIAL: Property of the American Academy of Orthopaedic Surgeons Contents may not be duplicated or reproduced without permission. Copyright 2012 Hospital-employed orthopaedists in general may need an organization to connect the dots for them to explain how they are at least tangentially impacted by physician and hospital legislation and regulation. SOSs may consider tracking and communicating changes in hospital legislation that are potentially impactful to hospital-employed orthopaedists. A segment of hospital-employed respondents request development of databases to access information on salaries/reimbursement, productivity data, and the cost-benefit of medical devices and procedures. Medical Group Management Association produces an annual Physician Compensation and Productivity Survey. It is unknown from the research if there is a general lack of awareness of these data or if they are insufficient for orthopaedist use. The Academy and/or SOSs may wish to determine how/if these data could be made useful for member contract negotiations. 33 RECOMMENDATIONS