In the Business-Minded Surgeon blog, members of OrthoFounders, a national group of orthopedic entrepreneurs, discuss how orthopedic surgeons can lead efforts to fix the problems in health care that are so palpable and apparent to themselves, but opaque and undervalued by others. Topics include how to maximize return based on business strategy and improved clinical performance, how to navigate the entrepreneurial journey, and how to connect with others who have similar interests.

 

 

BLOG: Orthopedic business language: The derivation of kappa, part 2

In last month’s blog, we defined the equation: Opportunity = Delivery + Neglect, where “opportunity” is the total daily orthopedic value created in our local markets, “delivery” is the total daily orthopedic value delivered — what we do; take care of patients — in our local markets and “neglect” is the total daily orthopedic value left untreated in our local markets.

After defining the market equation, we developed a full analysis of opportunity, and its component parts: pathology; payer; and practice equity. For a chance to read or review that discussion, click here. In summary, opportunity is understood to represent all of the orthopedic value in a local market that is available for treatment, regardless of whether patients seek care. In this blog, we will focus on the delivery side of the equation, which includes two terms, delivery and neglect. The delivery side of the equation is typically more interesting to us as private practitioners, because, unlike the opportunity side of the equation, our practices have an active role in managing and manipulating these quantities.

If opportunity can be represented by the term TDOVCm, or the total orthopedic treatment opportunity that is created every day, then there must be a corresponding term for the amount of orthopedic care that is actually delivered by all practices in a given market every day. That term is “total daily orthopedic value delivered in the market,” or TDOVDm. TDOVDm is the critical concept that organizes our business framework and is therefore deserving of a unique symbol, which is represented by κ (kappa). κ is an orthopedic-specific term that correlates with total addressable market (TAM), a key business concept that chief executive officers use to organize, manage, and measure their companies’ success.

At first blush, it may seem that TDOVCm equals TDOVDm, meaning that the opportunity and delivery sides of the equation balance. However, we know this to be untrue. In fact, much of the orthopedic value created every day is not treated, but rather neglected. For a variety of reasons that we will explore, many people have an orthopedic disease for an extended time before seeking care for their complaints. Therefore, a true balance of the orthopedic market equation would be:

 TDOVCm = κ + Neglect

In a perfect world, neglect would be of small magnitude. Patients with minor complaints could easily treat themselves, while patients with more bothersome complaints would face no significant barriers to engaging in orthopedic care. The result would be high patient engagement and overall better community health.

Unfortunately, we recognize neglect is high. The barriers to successfully obtaining orthopedic care are enormous: difficulty in gaining an appointment; high (and increasing) out of pocket costs; and the natural tendency of many patients to procrastinate when it comes to seeking better health, among many other reasons. So, we must recognize the neglect component is large, which causes further orthopedic and medical problems, more expensive treatments and inefficiencies in our practices due to the creation of uneven staffing demands during uneven demand cycles (eg, January delivery of care is lower than December delivery of care simply due to resetting of insurance deductibles).