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Thursday, April 18, 2024

OrthoCarolina’s CEO has MD-MBA cred

OrthoCarolina’s new leader merges business acumen with a surgical background.

Leo Spector, CEO OrthoCarolina

When Charlotte spine surgeon Leo Spector returned to the classroom more than four years ago, his fellow students in the Duke University Executive MBA program peppered him with questions. A disconnect existed, he says, about the business of healthcare and his classmates’ familiarity with nonmedical corporations.

“Running a factory is not the same as running an operating room, although you can apply some of the same principles,” says Spector, who earned his MBA from Duke in 2020 and became CEO at Charlotte-based OrthoCarolina in January.

Spector, the son of a general orthopedic surgeon in Boston, started working at OrthoCarolina during a fellowship at its spine center 18 years ago. Around the same time, about 45 doctors who had been with Charlotte Orthopedic Specialists and Miller Orthopaedic Clinic formed the physician-owned practice in 2005.

Under previous CEOs Dr. Dan Murrey and Dr. Bruce Cohen, both surgeons like Spector, the practice has grown to about 112 physician shareholders, 472 medical providers and 1,700 employees. It has more than 30 orthopedic practices from Boone to Bennettsville, South Carolina, and as far west as Shelby.

Spine surgeon Murrey left in 2016 and is now chief physician executive for a large specialty care division owned by United Healthcare Group. Cohen, who is a foot and ankle surgeon, has returned to his general practice at OrthoCarolina.

While interviewing him for the job, Spector’s colleagues took note of his degree from Duke, which ranked as the fifth-best Executive MBA program last year, according to U.S. News
& World Report. “I think sort of tongue-in-cheek, they said, ‘OK, now that you’ve got your MBA, you’re ready to be the CEO, right?

“And I said, ‘I’m as ready to be the CEO with my MBA as I was ready to be a doctor with my MD,’ meaning, yeah, you’ve got the schoolwork, but you also have to get the actual practical experience,” says Spector.

Pursuing an MBA was a personal choice, supported by his wife and two children, who were 10 and 14 when he started the 18-month program. He says he had grown confident in his skill as a spine surgeon, a responsibility that terrified him when he was starting his practice. He knew his competency as a spine surgeon had grown when repairing a broken ankle caused him more anxiety than cutting into someone’s back, he notes.

CONSTANT GROWTH
Spector has always been interested in the business of medicine, which led him to leadership positions within OrthoCarolina, including chief quality officer and chair of
the Quality/Value Committee.

“I felt if I wanted to grow as an administrator, I should go back and get the formal education,” he says. “Life is all about learning and growing and constantly developing,” he adds. “Once you stop doing that, what’s the point?”

Spector and his wife, who have been married for 24 years, discussed the MBA’s cost and time commitment. Both agreed that if he didn’t pursue his goal, they’d regret the decision in 10 years. He isn’t sure if the degree factored into him getting the CEO position but counts that as a side benefit.

“I recommend business school to anybody. I really did love that 18-month period of time learning,” he says. “Business school is one of those places where every class is so applicable to life. Like, I took my negotiation class, and my wife didn’t like that because now I can negotiate with her on everything.”

He continued his medical practice during his MBA work and he’s still practicing two days a week. The program required him to spend one weekend a month at the Durham campus, with other coursework completed at night and on weekends. Approximately 20% of his class worked in the healthcare industry, and about half of those were physicians.

Nowadays, he spends a day per week seeing patients in a clinic setting, with a second day focused on surgeries. Keeping his hand in the practice of medicine remains important. “There’s obviously high stakes involved with spinal surgery, but like anything in life where there’s high risk there’s also high rewards,” he says. “There’s a great opportunity to really make a high impact in improving someone’s life and that’s what I love about the job.”

In the medical hierarchy, surgeons rank toward the top in pay. In 2022, orthopedic surgeons had the second-highest average annual compensation ($573,000) for specialists, behind plastic surgeons ($619,000), according to a report by Medscape news service.

“Every surgeon thinks they’re a rock star. You have to have a certain ego to think you should be able to cut open a human body and make it better,” he says. “No matter how big the ego is, they all learn that surgery is a very humbling experience. Typically, when your ego gets a little too big, it’s about to get deflated a little bit because unfortunately surgery doesn’t always go exactly the way we want it to despite the best efforts from the team and the surgeon. Those kinds of things help keep the ego in check.”

OrthoCarolina considers it important that a physician lead the practice. “Part of the desire to have an MD/CEO at OrthoCarolina is to have someone who is trained to take care of the patients every single day and sees the challenges that the providers (of care) face and the patient’s face,” says Spector.

He also sees the benefit of doing both. “When I’m working as an administrator, as the CEO, I can have that direct understanding of one-on-one with the tree (patient) and also that 10,000-foot view of the forest (practice.)”

LEARNING CURVE
Early into his CEO role, Spector says he’s learning about the roles and challenges of his different duties.

“As a surgeon, we’re very much used to being in charge,” he says. “As CEO, I can’t do everyone’s job at OrthoCarolina.” One job requires making quick decisions, the other listening, making sure different perspectives are heard. His Duke training helped him understand he didn’t need to be an expert in finance, marketing or business operations to be a successful CEO.

“My job as CEO is not to do everybody else’s job, it’s to make sure we have a great team and that we’re all pulling in the same direction, which is making sure we’re doing a great job of taking care of patients.”

OrthoCarolina is focused on improving access to care and trying to contain healthcare costs, he says. The enterprise is largely content with its existing markets, which benefit from the region’s strong population growth. The most recent clinic opening was in Fort Mill, South Carolina, one of the fastest-growing Charlotte suburbs.

OrthoCarolina and Durham-based EmergeOrtho employ about 50% of North Carolina’s orthopedic surgeons and account for about half of the musculoskeletal spending, says Spector. Emerge is larger, with about 270 physicians and specialists and 45 offices ranging from Beaufort to Waynesville. The two practices don’t compete in the same cities, except for Hickory, reflecting a conviction that direct competition wouldn’t serve anyone’s best interest, he says.

Last year, the two practices partnered with Optum Healthcare, a subsidiary of UnitedHealth Group, to help both practices control costs and improve outcomes. That partnership, called Health Innovation Value Enterprise, could grow into a “good model to other regions or states” to replicate, he says.

“There’s enough waste in the health care system — as in any industry — if we can help
get that out of the system, there’s plenty of savings to go around for patients to the government to doctors,” he says. Minneapolis-based UnitedHealth is the largest U.S.
health insurer.

Both OrthoCarolina and EmergeOrtho have resisted the trend in medicine to sell ownership stakes to private-equity companies. At least 15 PE-backed management companies own practices nationally, with dozens of sales occurring since 2017, KFF Health News reported last year.

OrthoCarolna’s leadership in its field in the Charlotte region means it works closely with the two dominant hospital systems, Atrium Health and Novant Health. Having both institutions benefits the region and physicians, Spector says. “Monopolies from a business standpoint are typically not the best,” he says. “So having some competition pushes both of them to be better and provide better service to the customer.”

In most cases, OrthoCarolina surgeons consider a patient’s primary healthcare provider and then schedule a procedure at the corresponding hospital. That provides easier access to patient medical records and coordination with primary doctors.

Spector says his life changed when he came to Charlotte for a fellowship at OrthoCarolina Spine Center. He planned to return to the Boston area, where he attended the University of Massachusetts Medical School and did a residency, and join his father’s medical practice. But his wife, whom he met while an undergrad at Colgate University in Hamilton, New York, fell in love with the area and its climate. Their oldest daughter was then 6 months old; she’s now a high school junior.

“Life takes interesting turns,” he says. “You just have to be open to where they take you.” The decision made a big difference in his career, he adds. “I don’t think I could have done what I do here if I were in Boston just because it’s so entrenched and not open to different people coming in.”

Spector says he has no timetable for how long he’ll remain in the dual roles. That decision will be balanced with his professional life, his medical practice and his family, he says. ■

 

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