Seven factors affecting orthopedic procedures in nonacute settings

In the past several years, ambulatory surgery centers (ASCs) have seen significant growth. The growth is expected to continue at a compound annual growth rate of 6.9% over the next seven years, increasing spend by around $22 billion dollars. There are many factors driving this increase in volume and spend. One of the main reasons for the shift in care site delivery is the high cost of healthcare in the United States.

Healthcare as a percent of gross domestic product is currently at 17.6% and growing. Compared to other countries, the U.S. has the highest costs per capita in the world. (Fig. 1) As U.S. health systems search for ways to reduce overall cost, government and commercial payers alike are lowering reimbursement rates for both the acute and non-acute settings. This is driving the need for healthcare to become more efficient and cost effective while keeping quality at the forefront.

Figure 1. Top 10 countries with the highest healthcare costs

Source: Healthcare costs by country 2024 (worldpopulationreview.com)

One of the biggest areas that has seen the most changes in care from the hospital to the ASC has been orthopedics. This includes procedures like total joint replacement and spine surgery. Sg2®, a Vizient company, projects more than a 13% growth in orthopedic outpatient procedures over the next decade, with growth in elective total joint replacements outpacing the service line.

Figure 2. Sg2 growth projections for orthopedic procedures

Over the next five years, elective hip and knee replacements are projected to grow to almost 30% and total shoulder replacements are projected to grow over 50%. Growth in total shoulder replacement is largely due to new technology like next-generation implants, improved surgical techniques and computer navigation, which led to increased patient eligibility. With Centers for Medicare & Medicaid Services’ (CMS) 2024 approval for reimbursement of shoulder replacements in ASCs, Sg2 predicts a continued shift in these procedures as long as there is ASC capacity to accommodate the volumes.

Spine is also expected to see continued growth, as shown in Figure 3.

Figure 3. Sg2 growth projections for spine

While ASCs are adept at handling a range of surgical procedures, they face unique challenges when it comes to orthopedic surgeries. As orthopedic procedures become more complex and common, as shown in figure 2, it’s important to understand these challenges and how they affect high standards of patient care, operational efficiency and financial sustainability.

Listed below are seven factors impacting the strategic decision to transition orthopedic procedures into a non-acute care setting.

1. Complexity of orthopedic procedures and related space constraints

Orthopedic surgeries often involve intricate techniques and advanced technology, such as robotics. Procedures such as joint replacements, spinal surgeries and arthroscopies can be technically demanding, requiring specialized equipment and specific clinical expertise. ASCs are typically designed for outpatient procedures that require less space and can be easily managed because of less complexity. In orthopedic cases like total joints or spine, multiple instrument trays must be sterilized and made available for the surgeon. This can be challenging for ASCs as historically they haven't had to implement specific sterilization parameters. Investing in equipment or outsourcing to a third party can impact an ASC’s operating margin.

The percentage of elective total hip and knee replacement commercial claims in ASCs has held steady from 2022 to 2023, according to a recent Sg2 analysis. The plateau is likely temporary and volumes will continue to shift to ASCs once capacity restraints are resolved — both the pure number of ASC rooms and the square footage of existing ASC operating rooms. Other barriers also play their part, but the most influential barrier is the design of existing ASCs. Several states that required a Certificate of Need to open an ambulatory surgery center are adjusting the criteria or eliminating the CNO altogether to accommodate the increase in demand of surgical procedures.

2. Postoperative care and recovery

Unlike more routine procedures, orthopedic surgeries often require extensive postoperative care and rehabilitation. ASCs must adopt evolving protocols for managing pain, preventing complications and ensuring that patients have access to appropriate follow-up care. This can be challenging given the outpatient nature of ASCs. Coordinating with physical therapists, managing pain management regimens and making sure patients follow their rehabilitation plans are important for successful outcomes.

3. Regulatory and accreditation requirements

Orthopedic procedures are subject to strict regulatory standards and accreditation requirements. ASCs must comply with various federal, state and local regulations, as well as industry-specific guidelines. This includes maintaining high standards for patient safety, facility cleanliness and surgical practices. Meeting these requirements often involves continuous training and updates to procedures, which can be both time-consuming and costly.

4. Patient volume and financial viability

ASCs often operate on a volume-based model, where financial viability depends on performing a high number of procedures. However, orthopedic surgeries can be less frequent compared to other types of outpatient procedures, impacting the financial stability of an ASC. To manage this, ASCs need to balance their case mix carefully and ensure that their orthopedic services are sufficiently profitable to justify the investment in specialized equipment and personnel.

5. Staff training and expertise

The complexity of orthopedic surgeries requires a high level of skill and expertise from surgical teams. ASCs must invest in ongoing training and professional development for their surgeons, nurses and support staff. Ensuring that the staff is well-versed in the latest orthopedic techniques and technologies is essential for providing high-quality care. Recruiting and retaining skilled professionals can be challenging, particularly in regions with a shortage of specialized healthcare providers. This is a large barrier in spine, as surgeons prefer working with their specialty teams.

6. Patient expectations and education

Patients undergoing orthopedic surgeries often have high expectations regarding outcomes and recovery times. ASCs must educate patients about what to expect before, during and after surgery to manage expectations and improve satisfaction. Providing comprehensive preoperative and postoperative education is crucial for ensuring that patients understand their role in the recovery process and adhere to rehabilitation protocols.

7. Insurance and reimbursement issues

Orthopedic procedures are often expensive, and reimbursement rates from insurance companies vary. ASCs must navigate a complex landscape of insurance and billing practices to ensure that they are adequately compensated for the care they provide. This involves managing preauthorizations, dealing with claim denials and understanding the nuances of different insurance policies.

CMS continues to update its inpatient-only list every November, increasing the types of surgeries that can be performed in an outpatient or ambulatory surgery center.

This shift continues to save the healthcare system as the cost to provide care for certain procedures is less costly in the ASC setting. However, there are some exceptions. For example, for patients with traditional fee-for-service Medicare, the co-pay for an ASC knee replacement will be 15% higher than the co-pay for hospital outpatient or inpatient surgery. Medicare caps hospital outpatient and inpatient co-payments for beneficiaries, but the cap does not apply to procedures in ASCs.