A patient remembers the wait for the appointment, the unreturned phone call, the week lost chasing an MRI authorization. They rarely remember the 90 minutes that actually fixed the knee. For most of orthopedics’ history, that gap did not cost the surgeon anything. The operation was the product, and everything around it was someone else’s problem.
That arrangement is ending, and the reason is money, not philosophy. Medicare has begun paying for the whole journey, scoring the whole journey and, increasingly, penalizing the parts of it orthopedic groups have never controlled. The practices that win the next decade will be the ones that decide to own those parts before a payer, an employer or a venture-backed competitor owns them first.
The policy made the case before the surgeons did
CMS spent 2026 turning episode coordination from a nice-to-have into a financial mandate. The Transforming Episode Accountability Model, mandatory for roughly 740 hospitals since Jan. 1, makes a hospital accountable for the cost and quality of a surgical episode, including lower-extremity joint replacement and spinal fusion, from the procedure through 30 days after discharge. Post-acute spending a surgeon never used to see, a skilled nursing stay, a home-health visit or an avoidable readmission, now lands inside the episode price.
The agency went further with the individual clinician. CMS finalized the Ambulatory Specialty Model, a mandatory program whose performance period begins Jan. 1, 2027, tying a slice of Part B reimbursement to how a specialist’s cost and quality compare with peers. Its low back pain cohort pulls in orthopedic and spine surgeons, putting the individual clinician, not just the hospital, at financial risk. Payment adjustments start at up to 9% and climb in later years. Read together, the two models deliver one message: The dollars now follow the entire arc of care, and so does accountability.
Layered on top is a straightforward revenue squeeze. In the 2026 Medicare Physician Fee Schedule, CMS finalized a roughly 7% cut to physician payment for services performed in facilities such as hospitals and ambulatory surgery centers, effective Jan. 1, and orthopedic groups are absorbing it while costs climb.
“From payer pressures to the migration of joint replacement from inpatient to outpatient, the squeeze is real,” Douglas Padgett, MD, surgeon-in-chief at New York City-based Hospital for Special Surgery, told Becker’s. “We’re all being asked to deliver the same, if not more, with less.”
What owning the journey actually means
For Thomas Obermeyer, MD, an orthopedic surgeon at Barrington (Ill.) Orthopedic Specialists, the problem is structural and visible to every patient who has lived it.
“In much of orthopedics, different parts of the patient’s care journey happen in different places,” Dr. Obermeyer told Becker’s. “Each piece is often owned and managed by a different organization.”
The evaluation happens in one office. Imaging happens elsewhere. Surgery happens at a hospital. Physical therapy happens in another building under another company’s logo. Each step can function well on its own. Patients still get lost in the spaces between them, and under episode-based payment, every one of those gaps now has a price tag.
The alternative is to collapse the handoffs. At Barrington Orthopedic Specialists, Dr. Obermeyer said, “the patient can come in, be evaluated, imaged, scheduled, operated on and rehabilitated really without ever leaving the organization.”
He frames the goal not as convenience but as continuity: “One injury, one organization, one team, start to finish.”
And he reorders the usual priorities. Most leaders chase outcomes first. He argues access comes first, because a patient who cannot get in does not get a good outcome at all.
“Access is critical and surely the first outcome measure that we’re evaluating,” he said.
That logic pushed the group to expand immediate-care clinics, add advanced practice providers and, in its most consequential move, open its own surgery center. The ASC did more than capture facility revenue. It became, he said, “a magnet for talent,” concentrating specialized staff in a way that compounded into better outcomes and more demand.
If orthopedics doesn’t own it, someone else will
The competitive stakes are sharper than a margin calculation. The most valuable real estate in musculoskeletal care, the longitudinal relationship with the patient, is exactly what digital health companies are now trying to claim.
Kevin Bozic, MD, chair of surgery and perioperative care at Dell Medical School at the University of Texas at Austin, has been blunt about the risk. “If we silo ourselves into proceduralists, we’re going to make ourselves less relevant,” he told Becker’s.
Virtual physical therapy platforms and musculoskeletal point solutions are positioning themselves as the front door and the long-term manager of these conditions. “There are a lot of others now vying for primacy in that space,” Dr. Bozic said.
His prescription is for surgeons to lead integrated teams that manage musculoskeletal conditions across the full journey rather than parachuting in for the operation. Dr. Padgett describes the same blind spot from a different angle: Orthopedics has historically obsessed over the surgical endpoint, the “last 5%” of the patient journey, while ceding the upstream and downstream care where most of the cost, and most of the relationship, actually lives.
The groups already doing it
The model is not theoretical. Charlotte, N.C.-based OrthoCarolina has pushed procedures out of the hospital and into ambulatory and office-based settings while contracting directly with employers on bundled pricing for orthopedic care.
“Less expensive doesn’t mean less better,” CEO Leo Spector, MD, told Becker’s. “Less expensive can actually be a better product.” A direct-to-employer bundle is, in effect, a group volunteering to own and price the entire episode, the exact muscle CMS is now forcing everyone to build.
Owning the journey also demands internal discipline that many independent surgeons resist. Standardizing implants, pathways and post-op protocols is what makes episode costs predictable enough to take risk on.
Michael Meneghini, MD, CEO of Noblesville, Ind.-based Indiana Orthopedic Institute, calls the necessary mindset collective autonomy: surgeons preserving judgment where it matters clinically while agreeing to standardize where variation only adds cost.
Groups that have run bundled payments for years already track cost per episode against benchmarks as routine, and the spread between average and top-quartile performance on cost and denials has grown wide enough to offset part of the reimbursement squeeze.
The catch
Owning the journey is capital-intensive and culturally hard. It means real estate, imaging, an ASC, therapy lines, navigation staff and data infrastructure, plus the governance to make autonomous surgeons row in the same direction. For many groups that is precisely the pressure pushing them toward hospital employment or private equity, the very consolidation that can strip the local control owning the journey requires.
Dr. Obermeyer argues there is a third path, citing physician-led partnerships that share administrative scale without surrendering ownership. Whether that middle path holds at scale is one of the open questions. So is how a group builds a defense around CMS models that increasingly score the individual surgeon rather than the institution.
What is no longer in question is the direction. The surgery was always the part orthopedics did well. The money, the risk and the patient relationship have all moved to everything around it. Groups can build the connective tissue themselves, or they can watch a hospital, an insurer or a software company build it and bill for the privilege.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
