An operation can go exactly as planned and still become a bad surgical episode. The patient leaves the hospital, then falls at home. Pain or swelling sends them to the emergency department. A rehabilitation stay stretches longer than expected. A complication leads to a readmission. The incision may be healing. The spending keeps accumulating.
Under Medicare’s Transforming Episode Accountability Model, hospitals are responsible for the cost and quality of care surrounding five types of surgery through 30 days after discharge. TEAM began Jan. 1 at 721 participating hospitals and includes lower extremity joint replacement, surgical hip and femur fracture treatment, spinal fusion, coronary artery bypass graft and major bowel procedures. CMS compares episode spending with a target price and adjusts performance for quality; hospitals may ultimately earn money or owe it back.
For Shannon Carpenter, MD, an orthopedic surgeon and founder of The Bone Health Clinic in Lenexa, Kan., the most consequential part of that policy is not the formula Medicare uses at reconciliation. It is the mismatch beneath it. Hospitals now own more of the outcome, but they do not necessarily select the patient, determine the surgical indication or control what happens once the patient crosses the threshold of home.
“They’re now holding the bag for a patient that they didn’t choose,” Dr. Carpenter told Becker’s. TEAM includes graduated participation tracks and a glide path into downside risk. But the direction is already unmistakable: Medicare is expanding the definition of a successful operation beyond the operating room. The hospitals that adapt will have to do the same.
The risk arrives before the patient does
Dr. Carpenter did not initially see herself as part of the TEAM conversation. Her career has focused on metabolic bone disease and fracture prevention. She founded the first standalone prevention-focused bone health practice in the Kansas City region and built her work around identifying risk before a fracture occurs.
At a bone health meeting in May, she heard hospital leaders were increasingly looking for surgery optimization capabilities. TEAM had not been central to her plans. Then she began reading. The more she examined the model, the more familiar its demands looked.
“But I could be a surgery optimization clinic,” she recalled thinking. “This is literally what I do. This is what I’ve done my entire career.”
Preoperative optimization is, at its core, an attempt to identify the complications waiting to happen. A diagnosis may establish that a patient could benefit from surgery. It does not establish that the patient is ready for it. Nutrition, bone density, opioid use, fall risk, chronic disease, mobility and support at home can all shape whether an otherwise appropriate operation ends in a routine recovery or an expensive cascade of complications.
“Preoperative optimization looks at the patient as a whole,” Dr. Carpenter said. “You’re making sure that patient is a good candidate for the procedure, not just that they have the pathology of knee arthritis.”
In many conventional workflows, that evaluation happens late. Dr. Carpenter has spoken with surgeons whose patients receive their final preoperative review only a few days before surgery. If the team discovers an uncontrolled medical condition or another risk that requires postponement, the patient loses a surgical date, and the surgeon is left with an opening that may be impossible to fill.
The clinical failure and the operational failure occur at the same time. Finding the problem weeks earlier changes the options. The organization can address the risk, educate the patient and preserve the schedule rather than discovering at the last moment that the operation should not proceed.
Under episode-based payment, optimization stops being an optional layer of good care. It becomes financial infrastructure.
The most expensive destination
Once the patient leaves the operating room, one decision can reshape the economics of the episode: where the patient goes next. For many elective patients, Dr. Carpenter believes recovery at home should be the goal whenever it is clinically safe.
“The biggest lever to pull is getting someone to go home instead of to a rehab facility,” she said. “Home has to be the plan.” That does not mean steering every patient away from post-acute care. Hip fracture patients and others with significant medical or functional needs may have little choice but to enter a rehabilitation facility. The difference is whether the stay becomes a transition or a destination.
For elective procedures, an organization should know before surgery why a patient cannot safely return home and what must change to make home recovery possible. Does the patient lack mobility? Is there no caregiver? Is the home unsafe? Could therapy, equipment or family planning remove the obstacle?
For patients who do require facility-based rehabilitation, the hospital needs clear goals and active oversight, Dr. Carpenter said. Without that, the patient may remain in a high-cost setting because no one is responsible for asking what must happen next.
“You have to stay on top of the rehab facilities and be sure that there are clear and concrete goals,” she said. TEAM does not penalize a hospital for one skilled nursing stay or emergency visit in isolation. It measures total episode spending against an adjusted target and incorporates quality into the result. But every avoidable day, duplicated service and preventable return to acute care pushes the episode in the wrong direction. The 30-day window rewards organizations that can see beyond discharge. Many still cannot.
The emergency visit a phone call can prevent
Some post-surgical emergency department visits begin with a clinical crisis. Others begin with uncertainty. The patient is in pain. A joint is swollen. The wound looks different. They do not know whether what they are experiencing is expected, and the easiest available answer is the emergency department. Dr. Carpenter believes one of the most valuable post-discharge interventions is also one of the least technologically sophisticated: giving patients someone they can reach.
She gives surgical patients her personal cellphone number during the acute perioperative period. Many calls, she said, do not end with instructions to seek emergency care. The patient needs context.
“The name of the game is really making sure people feel well taken care of so that they don’t just pop back into the ER,” she said. “Most of the time, they just need reassurance.” That reassurance depends on work performed before the patient goes home. Patients need to understand what normal postoperative pain may feel like, which symptoms should improve, which should prompt a call and which require urgent evaluation.
The difficulty is not that surgeons consider that education unimportant. It is that they are trying to deliver it while moving through a compressed preoperative encounter filled with consent, risk discussions and clinical decisions.
“A lot of it is we just don’t have time,” Dr. Carpenter said. A single joint class or folder of instructions may not be enough. Patients retain different information at different moments. New questions emerge once the abstract idea of recovery becomes an aching knee at 2 a.m.
Dr. Carpenter’s model uses repeated education before surgery, active outreach after discharge and a digital interface through which patients can review guidance and contact the care team. The intervention is not designed to replace the surgeon. It is designed to absorb the work the traditional encounter leaves unfinished.
A hospital problem surgeons still control
TEAM places the hospital at the center of financial accountability, but physicians still influence many of the decisions that determine whether the episode succeeds. Surgeons select patients. They establish indications. They choose procedures. Their preferences affect implants, length of stay, discharge planning and the use of post-acute care. The hospital, meanwhile, receives the reconciliation result.
Dr. Carpenter described the arrangement as “a little weird:” The hospital is being held responsible for choices it may influence, but does not fully control. The tension becomes clearest when a medically fragile patient is technically operable but carries an elevated risk of complications. The surgeon may see an opportunity to relieve pain or preserve function. The hospital may see an episode likely to exceed its target.
Neither perspective is inherently wrong. But without a shared optimization process, the disagreement may not surface until the patient is already scheduled.
TEAM permits hospitals to create financial arrangements with physicians and other collaborators, giving organizations a potential mechanism to share gains and align incentives. The deeper alignment, however, must occur before reconciliation. Hospitals and surgeons need a common answer to a basic question: What level of risk are they willing to accept, and who is responsible for reducing it?
The build-or-buy decision
Dr. Carpenter is not a disinterested observer of this problem. She is building a surgery optimization service intended to manage patients before surgery, support hospital workflows during the admission and follow patients through the 30-day recovery period. Her proposal gives hospital executives the same choice they face with many capabilities created by value-based care: build internally or bring in an outside partner.
The strongest case for keeping the work inside the hospital, she said, is existing capacity. A system may already employ nurse practitioners, navigators, residents or care managers who can take on the calls, monitor recovery and coordinate the episode without requiring significant additional hiring.
But having employees is not the same as having a program. The organization still needs protocols for five distinct surgical episodes, standardized order sets, escalation pathways, patient education, data collection and staff capable of responding when a patient reports a problem. It also needs a plan for turnover. When the person who built the process leaves, the capability cannot leave with them.
“You still have to have somebody at the end of that line to take those calls and call those patients and deal with the issues,” Dr. Carpenter said. Her argument for an outside partner is speed. A hospital can add a functioning layer to its existing operation rather than recruit a navigator, build the workflows and train the program from the ground up.
That case may be especially compelling for smaller and under-resourced hospitals. But outsourcing does not relieve hospital leadership of accountability. Executives still need to understand the protocols, monitor performance and ensure that an external service is integrated with physicians, inpatient teams and post-acute providers. There is no true “easy button” for taking responsibility across settings. There are only different ways to build the machinery.
TEAM may be the rehearsal
Dr. Carpenter sees TEAM as the beginning of a much larger payment shift.
CMS has proposed the Comprehensive Care for Joint Replacement Expanded Model, or CJR-X. If finalized, the model would begin Oct. 1, 2027, and apply nationwide to most eligible hospitals performing hip, knee and ankle replacements in inpatient and hospital outpatient settings.
Unlike TEAM’s 30-day window, CJR-X would hold hospitals accountable through 90 days after discharge. Its proposed quality framework includes a patient-reported outcome performance measure alongside complication, hospital-visit and patient-experience measures. Hospitals participating in TEAM would initially be excluded, then become eligible for CJR-X after TEAM ends.
For leaders wondering whether to make substantial investments now or wait for the policy landscape to settle, Dr. Carpenter believes the answer is already visible. CMS is not retreating from episodes. It is widening them.
CJR-X remains a proposal, and its final design could change. But its scale and 90-day horizon signal what hospitals should prepare to measure: not only whether the operation was performed safely, but whether the patient recovered, regained function and avoided unnecessary care.
Dr. Carpenter described TEAM as an on-ramp. The proposed joint replacement model is the highway.
Dr. Carpenter’s metabolic bone expertise exposes another challenge created by episode-based payment: the difference between optimizing the bundle and treating the underlying disease.
A patient who suffers a fragility fracture may need evaluation and treatment for osteoporosis. Without that intervention, the hospital may repair the immediate injury while leaving the patient vulnerable to the next one.
Yet services delivered during the TEAM window can add to episode spending. Dr. Carpenter’s approach is to identify the patient during the surgical episode, then transition them into longer-term bone health care after the 30-day window closes when clinically appropriate.
The timing is financially strategic. The objective is clinically larger. TEAM measures whether the hospital managed the surgical episode effectively. It does not erase the chronic disease that helped create the episode.
For Dr. Carpenter, the best model must do both: control the immediate cost without allowing the patient to disappear once the bundle ends. That is the paradox of episode-based care. A defined window can create accountability. It can also create a cliff.
Hospitals are large ships with small rudders
CMS has already supplied the destination: more coordinated care, fewer avoidable returns and greater accountability for what happens after surgery. It has not supplied every hospital with the operating model required to get there.
That work falls to executives, physicians, nurses, therapists, post-acute partners and the growing field of outside companies offering to connect them. The challenge is not simply implementing a new Medicare program. It is rebuilding a surgical pathway that was designed for a different payment system.
Fee-for-service divided the journey into billable encounters. The hospital handled the admission. The surgeon performed the operation. The rehabilitation facility managed recovery. The primary care physician resumed long-term care. TEAM places those fragments inside a single financial frame. The organization can no longer afford not to know whether the patient made it safely from one part to the next.
“Hospitals are large ships with small rudders,” Dr. Carpenter said. “I would want to be way far ahead of this.”
That warning is not about predicting the next regulation perfectly. It is about recognizing what Medicare has already made clear. The surgery is no longer the whole product. The product is the patient’s recovery.
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.