SOS shows backbone in transforming its operation

DeWITT — Syracuse Orthopedic Specialists, PC (SOS), headquartered in Widewaters Park in DeWitt, is a growing 30-doctor group that currently has offices in Auburn, Baldwinsville, Camillus, Cicero, Clay, DeWitt, Fayetteville, Liverpool, North Syracuse, and Onondaga Hill. 

The health-care provider’s recently expanded footprint comes on top of explosive growth in the past few years with the addition of two SOS-Plus locations for after-hours care (DeWitt in September 2011 and Onondaga Hill in August 2013), and the acquisition of seven physical-therapy centers.

SOS is responding to a few emerging trends in health care.

“There are several things driving our need to grow,” says Dr. John Francis Fatti, president of SOS. “In order to meet the demands of our community, we are developing contractual relationships with our payers: the government, private insurance companies, employers [who pay for worker’s compensation], coaches and trainers in sports medicine, and the hospitals. Second, to recruit a staff of well-trained physicians, SOS needs to offer a variety of sub-specialties, and ancillary services to create efficiencies. Third, the demand for the latest technology is a huge capital burden which can best be supported through economies of scale. And fourth, all payers are ratcheting down their reimbursements to providers. To maintain our revenue, we need to become more efficient and care for more patients. It’s also clear to me that reimbursements are finally moving to a bundled, capitation model, so SOS will need to be involved in the entire episode of the care continuum.”

The initial business plan originated in 1999, when three local orthopedic groups — University Orthopedics & Sports Medicine, P.C., CNY Orthopedics, and Onondaga Hill Orthopedics (a d/b/a owned by eight doctors) — began talks to merge the entities. The merger resulted in the founding of SOS in 1999. 

“Today, SOS offers comprehensive medical care for musculoskeletal disorders, which includes not just bones but also muscles, ligaments, and tendons,” Fatti emphasizes. “Our practice offers an extensive list of sub-specialties including foot and ankle, hand and wrist, sports medicine, joint-replacement, and spine. The only sub-specialty not included is pediatric orthopedics.” 

Fatti continues, “Our extension into physical therapy (PT) is a natural fit that dovetails with our strategic plan. Last year (June 16, 2014), we closed on five local centers of Fitness Forum plus Salt City Physical Therapy and Orthopedic Rehabilitation Services [PT, PC].” 

SOS did not disclose the financial terms of the deals, but indicated that Jim Smith, the president of Fitness Forum, signed a 5-year contract to help SOS expand. “The decision to expand into PT was not a financial decision, but rather allows us to offer enhanced, therapeutic services for our patients,” states Fatti. “It also positions us for the ‘bundling’ of reimbursements.”

Size and scope

What started out as a concept 18 years ago is now a major business spread over 18 locations. In 2014, the practice saw more than 60,000 patients. The enterprise occupies 135,000 square feet, of which SOS owns approximately 54,000; the rest is leased. 

SOS employs 620 people, which includes temps and per-diems (81 are in the physical-therapy division). SOS has grown its employee count 56 percent in just the past five years. Of the group’s 30 doctors, 25 are shareholders in the corporation. The Business Journal estimates SOS’s annual revenue at $75 million.

SOS also offers management services to other health-care practices, such as the New York Spine & Wellness Center (NYS&WC) with locations in the Syracuse area and a presence in the Greater Buffalo region. NYS&WC specializes in the area of acute and chronic pain with special emphasis on spinal disorders. 

Along with Dr. Fatti as the president, Michael Humphrey serves as the CEO of SOS, and Dr. Brett Greenky is a corporate vice president. Five other doctors in the group join these three to act as the executive committee. The members serve 3-year terms. To help support its rapid growth, SOS has turned to area professional firms: M&T Bank is its primary lender; The Bonadio Group handles the accounting; Wood & Smith, P.C. is the company’s legal firm; and Harbridge Consulting Group provides retirement-planning consulting.

“The need to grow rapidly by attracting new patients is supported by our marketing program,” Fatti says. “I like to think that SOS is everywhere. We spend 1 percent of our annual budget on community events and promotion, everything from a weekly employee newsletter to sponsoring area events. (Some of the community organizations sponsored by SOS are On Point for College, the Syracuse Chiefs, the YMCA of Greater Syracuse, the First Tee of Syracuse, and the Jim and Juli Boeheim Foundation.)”

SOS is gradually increasing its public profile. “I don’t think the public understands yet how diverse the organization is and how many services we offer. But word is getting out, and we’re receiving great feedback,” says Fatti. “For example, our two SOS-Plus, orthopedic, immediate-care locations, which are open from 5 p.m. until 8:30 p.m. on weekdays and 10 a.m. to 2 p.m. on weekends, are a big hit with the public, who appreciate both the convenient hours and locations. We have a quality product, and we need to promote it.”

Challenges

The path to growth is not without competitors and difficulties in recruiting. “SOS is now one of two major orthopedic groups in the region,” notes Fatti. “The Upstate Bone & Joint Center [located on Fly Road in DeWitt] has 21 doctors on staff and also offers comprehensive orthopedic care. Like SOS, Bone & Joint promotes one-stop shopping, offering consultations, evaluations, and treatment for a full spectrum of orthopedic conditions. What’s unusual is our friendly rivalry. I’m personal friends with the president, Stephen A. Albanese [M.D.], which makes for a unique relationship. For example, we both share in supporting Syracuse University athletics, and in June, our two organizations will begin offering joint services at Community Hospital (now renamed Upstate University Hospital Community Campus). That makes us both competitors and friends.”

Finding doctors is another challenge. “Recruiting is also a concern as SOS accelerates its growth,” Fatti continues. “We have an aging practice and need to attract young doctors to ensure not just our continuity but also our growth. Frankly, it’s hard to attract talented physicians to Syracuse. I teach at Upstate University Hospital, so I know that 90 percent of the residents and fellows have a sub-specialty in orthopedics, thus requiring us to offer a broad range of sub-specialties within the practice. Also, the doctors aren’t interested in employment unless the group offers ancillary services which allow for participation in and control over the patients’ entire episode of care. I can’t overstate that this is a major attraction, maybe our best recruiting tool. We utilize recruiting agencies to help identify candidates, but the best technique is word of mouth. That’s why our doctors are always talking directly to candidates. In the end, the best success is with prospects who grew up in this area and [who] have family ties.”

While Fatti is optimistic about SOS’s business plan to be the leading, regional orthopedic practice, he has concerns about the direction of health care in America. “This is my 35th year as a physician, during which I have seen a number of changes in the delivery of health care,” reflects Fatti. “I think the advances in technology are absolutely amazing. Our increasing capacity to image is critical to a proper diagnosis; advances in joint-replacement … [remind me that the bionic man is here]; and physical-therapy techniques have improved manifold. Add to this the latest research to help us understand how the body heals. We also have electronic-medical records that allow any provider to have real-time information on a patient’s medical history. That’s a tremendous aid to the physician. And we offer multiple locations and extended hours for the convenience of our patients.

“But challenges have also come with the changes in medicine,” Fatti continues. “To begin, doctors seem to have less time to spend with their patients because of declining reimbursements. After all, medicine is not all science and technology; there is no substitute for personally observing the patients and interacting with them. I also think we need more medical candidates in the pipeline. Health care has taken a hit, because we’re not attracting the top numbers to our profession. I see this from decades of teaching medical students and from declining applications to medical schools. Many of our best and brightest students have abandoned medicine for a better way to make a living. We need to bring those students back into the fold of this noble profession.

“And finally, technology and the reimbursement system have created the need for a huge support staff,” Fatti adds. “When I started in my first practice, there were five docs and five support staff. Today, SOS has 11.3 support staff for each doctor. Now, some of that is because we have so many locations, but some of it has to do with the overreaching need to obtain authorizations. We have many talented employees who spend much of their time just calling for authorizations. We also have more than 10 employees focused on our IT needs and more than 30 X-ray staff members in support of our multiple locations. For those of us who went into medicine to take care of people, it’s becoming much more complicated and less directly rewarding.”

Change

The many changes at SOS are designed to keep the practice ahead of the changes that are reshaping health-care delivery. The creation of multiple locations, the proposed geographic expansion, the inclusion of multiple sub-specialties, the surgery center, and the decision to offer physical therapy are all examples. The most recent example occurred on Jan. 1 of this year when SOS was selected to participate in an innovative program created by the Centers for Medicare & Medicaid Services (CMS). The “Bundled Payments for Care Improvement” (BPCI) initiative is an agreement with CMS to reimburse providers based on financial and performance accountability. BPCI replaces the fee-for-service model in the expectation that “… bundled payments can align the incentives of all providers — hospitals, post-acute-care facilities, physicians, and other practitioners — allowing them to work closely together across all specialties and settings.” (according to a CMS fact sheet dated 1/30/14.)

SOS is one of only three area providers to join the program. “I think the future of medical reimbursement is the idea of bundling,” notes Fatti. “We call it bundling, but it’s really capitation: One payment to cover the entire cost of a patient’s care. Done correctly, this model delivers higher-quality patient care, better care coordination, and even lower costs. For SOS to be the leading practice in our region, this is just one more step to stay ahead of the curve in the ever-changing health-care landscape.”

Fatti, 60, is a Syracuse native. He graduated from Christian Brothers Academy in 1972, received his bachelor’s degree from the University of Notre Dame in 1976, and earned his medical degree in 1980 from the Upstate Medical Center. Fatti completed a general-surgery internship at Hartford Hospital in 1981, his residency in orthopedic surgery from Upstate in 1985, and his fellowship in hand surgery from the Tufts New England Medical Center in Boston. He joined CNY Orthopedics in 1986 and SOS in 1999. Fatti and his wife, Jacqueline, live in Camillus. The couple has three children, one of whom is a doctor in the SOS practice. When not helping patients, Fatti enjoys golf and fly-fishing.

Humphrey, the SOS CEO, earned a bachelor’s degree in accounting from Utica College. He worked with Ernst & Young as a CPA and then worked in finance at St. Joseph’s Hospital and Crouse Memorial Hospital in Syracuse before joining SOS. Humphrey has been CEO for more than 10 years.