As more spine procedures move into ASCs, a financial divide is taking shape: Who captures the revenue from routine outpatient procedures, and who bears the cost of the complex cases that remain in hospitals?
Advances in minimally invasive techniques and outpatient care are expanding the range of spine procedures that can be performed outside hospitals. For surgeons and practices with ASC ownership, the shift creates opportunities to participate in facility revenue beyond professional fees. For hospitals, it raises questions about how to sustain costly inpatient services as more surgical volume moves elsewhere.
The tension is becoming more pronounced as reimbursement pressures mount, forcing spine leaders to reconsider where procedures are performed, who controls the facilities and how the economics of care are divided.
The outpatient revenue shift
At Chicago-based Midwest Orthopaedics at Rush, 70% of spine cases are now performed in surgery centers, according to Brian Cole, MD, the group’s managing partner.
“If the hospitals don’t play in that space, they will continue to lose facility revenue,” Dr. Cole told Becker’s.
His warning reflects a broader shift in spine surgery’s economics. As more procedures become appropriate for outpatient settings, hospitals that have historically captured facility payments for those cases face growing pressure to develop or participate in ASCs. The financial stakes are substantial, but outpatient growth does not guarantee stronger margins.
“The thing about the ASC model is that not all service lines are profitable, and not every state has a profitable ASC business line,” Dr. Cole said. Payer contracts, implant costs, staffing expenses and procedure mix can determine whether an ASC generates sustainable returns. Still, for hospitals that do not participate in the outpatient market, the loss of surgical volume can mean losing an increasingly important source of facility revenue.
The tension extends to surgeons who have said more procedures could safely leave hospitals. Lali Sekhon, MD, PhD, a spine neurosurgeon at Reno (Nev.) Orthopedic Center, estimated that his surgical work generated $20 million in annual revenue for a trauma center.
“Through different sources, I found out I generated $20 million in revenue for the trauma center I work at in one year,” Dr. Sekhon told Becker’s. “They don’t want to lose that, and that is going to be a big challenge.”
Dr. Sekhon has argued that certain single-level lumbar fusions are increasingly appropriate for outpatient settings, but financial incentives and reimbursement barriers can complicate the transition. His estimate illustrates the revenue at stake, although hospital revenue does not necessarily reflect actual collections or profit.
The cases hospitals cannot afford to lose — or keep
The other side of the outpatient migration is the growing concentration of complex spine cases in hospitals.
Keven Burns, MD, an orthopedic spine surgeon at the Spine Institute of Arizona in Scottsdale, sees minimally invasive techniques expanding the number of patients who can undergo decompressions and limited fusions in ASCs. Extensive spinal reconstructions, however, continue to require hospital resources.
As more straightforward procedures move outpatient, hospitals may be left treating a greater proportion of patients requiring lengthy operations, specialized teams, expensive implants and substantial postoperative care.
“We have awesome technology right now, but financially, can we even implement it?” Dr. Burns told Becker’s. Dr. Burns worries that declining reimbursement and new payment models could make hospitals more selective about accepting complex cases, particularly when the costs of surgery cannot be reduced through a shift to outpatient settings.
Wilson Ray, MD, a spine surgeon at WashU Medicine in St. Louis, raised similar concerns.
“As more routine, financially favorable cases move to outpatient settings, hospitals are increasingly left caring for the sickest and most complex patients while still having to support the infrastructure, staffing, research and educational missions that come with being a major medical center,” he said.
For academic medical centers, the shift could mean a growing concentration of costly, complex cases without the revenue from routine procedures to help offset them.
The ownership advantage
The divide is also reshaping the financial relationship between spine surgeons and the facilities where they operate. As professional reimbursement tightens, ASC ownership offers physicians an opportunity to participate in facility economics while gaining greater control over scheduling, staffing and supply costs.
Ramin Raiszadeh, MD, an orthopedic spine surgeon at the Spine and Brain Institute of San Diego, said those ownership arrangements will become increasingly consequential.
“Medicare keeps cutting surgeon pay while moving more cases and more money to outpatient facilities, so surgeons without a stake in the facility will keep losing income and control,” he told Becker’s.
Dr. Raiszadeh favors joint venture ASCs involving hospitals, management companies and surgeon investors, arguing that such arrangements can combine hospital capital and payer leverage with operational efficiency and physician participation in facility revenue.
Other spine leaders are pursuing similar strategies.
Ernest Braxton, MD, a partner at Vail (Colo.) Summit Orthopaedics and Neurosurgery, identified ASC ownership and ancillary services as ways practices are diversifying revenue as professional reimbursement declines.
Such ownership gives surgeons access to facility revenue beyond professional fees, but also carries financial risks tied to operating costs, payer mix and procedure volume.
Who decides where surgery belongs?
As the financial stakes of outpatient migration grow, spine surgeons are also raising concerns about who ultimately determines where patients receive care. CMS’ planned phaseout of the inpatient-only list is expected to expand the range of procedures eligible for outpatient reimbursement.
“Does that mean that everything should go to the surgery center? Absolutely not,” Benjamin Stein, MD, an orthopedic surgeon and ASC company owner in the Washington, D.C., area, told Becker’s.
Dr. Stein and John Peloza, MD, founder of Peloza Spine in Chesterfield, Mo., emphasized that patient complexity, comorbidities and clinical needs must determine the appropriate surgical setting.
“The most important thing is making sure the clinicians are the ones deciding that, and that it’s not somebody who’s a nonclinician looking at a P&L sheet deciding all of this needs to go to the surgery center,” Dr. Stein said.
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.
