Orthopedic surgeries have increasingly shifted to the ASC setting in the last 10 years as minimally invasive technology advanced. More recently, CMS, commercial payers and patients have pushed these procedures to the ambulatory environment, where they can be done safely and at a lower cost than the inpatient setting.
Here's how three orthopedic group CEOs are looking at ASC and practice growth:
John Ryan. CEO of OrthoIndy (Indianapolis): Among several challenges for ASCs, I think the three most significant are procedure volume, payer contracting and case mix. Any one of these three challenges can mean the difference between an ASC that is successful and one that fails. I am no doubt biased, but orthopedics is a single solution to address all three of these challenges. Regarding procedure volume, predictive modeling in demographics points to a population boom of those seeking orthopedic care, so we know that orthopedic procedures will be a meaningful source of ASC case volume growth in the future. We also know that more and more orthopedic procedures are migrating into the outpatient setting from the inpatient setting, providing yet another source of growth in ASC procedure volume opportunity. Regarding payer contracting and case mix, a few thoughts come to mind.
First, reimbursement for orthopedic cases could always be better, but as reimbursement goes, it is better than several other specialties, making it an attractive specialty to offer at an ASC. Related, I am likely stating the obvious when I say that ASCs with meaningful orthopedic volume stand a much better chance of financial viability and sustainability than those [without]. While it is absolutely possible for an ASC to be financially successful without orthopedics, those ASCs with orthopedic procedure volume at or above 25 percent have a far clearer path to navigate the other economic pressures on an ASC's financial health.
Aaron Johnson. CEO of Twin City Orthopedics (Golden Valley, Minn.): Between now and 2025, we anticipate we'll need to add around 30 orthopedic surgeons. We have a dedicated individual on our team who is solely focused on orthopedic surgeon recruitment. We're investing in that strategy and planning for growth because we're seeing market share increases in almost every market we're in. The demand is certainly there, and we're working diligently to meet those demands.
It's no secret in orthopedics that through advancements in surgical technology, anesthesia protocols, medications, etc., more and more cases are moving to ASCs. And that's great because everybody wins — surgery centers provide as good, if not better, outcomes and typically at a lower cost. That said, however, we will always need hospitals. There are some patients who will need to have procedures done at a hospital, which is why we pursued creating the Orthopedic Institute with Ridgeview.
That said, we're developing an ASC in Plymouth and are looking at expanding our existing ASCs. Our physicians operate out of seven ASCs now. We're examining those facilities to see if there are opportunities to add additional OR space. Like many in the orthopedic industry, we are positioning our practice and our ASCs for growth because so many surgeries are moving to the outpatient setting.
Michael Boblitz. CEO of Tallahassee (Fla.) Orthopedic Clinic: A key trend for the ASC model is to replicate the environment for spine and joint replacement surgery to realize the benefits of specialization: superior efficiency, less variation, less length of stay and better outcomes. This involves designing a spine and joint replacement surgical center that affords the ability to care for complex patients that require a 23-hour stay, along with the comprehensive range of robotic solutions that span the O-Arm spine imaging system, Mako and Rosa, which orthopedic surgeons require for best practice. The broader benefits reflect the patient being back in the comfort of their home in a matter of hours, along with a 30 to 40 percent lower cost for the payer and employer. At the same time this solution provides a needed relief valve for the hospitals that must prioritize the higher cost complex and emergent patient population.
I see orthopedics evolving into two ASC models in the future which operate in parallel to one another. This design yields the benefits on specialization of staff, resources and destination level facilities:
1) Spine and joint surgery centers
2) Outpatient orthopedic surgery center to service the other orthopedic divisions
With recent reports now indicating orthopedics ranks second in total cost of care in the commercial payer environment (behind cancer and now ahead of cardiovascular), the time has come for a better model to bend the curve and improve value.