Orthopedic Surgery - Major Changes in Hospital Care and Payment
By: Eric Bricker, MD
The Gist Newsletter and Stratasan have created an excellent analysis of the shift in knee replacements and hip replacements from the hospital inpatient setting to outpatient and ASCs.
Inpatient total knee replacements have decreased from 100% to 25% between 2017 and today. Inpatient total hip replacements Have decreased from 100% to 37% between 2017 and today.
Meanwhile, outpatient and ASC total knee and total hip replacements have gone from 0% in 2017 to the VAST MAJORITY today.
Why? Why do so many fewer inpatient orthopedic surgeries happen?
- CMS removed knee replacements from its inpatient-only list in 2018. Before 2018, Medicare would only pay if the surgery was done in the inpatient setting. Likewise, CMS removed total hip replacements from its inpatient-only list in 2019.
- COVID–the pandemic caused many hospitals to cancel their operating room schedules because of infection and staffing problems and as a result, orthopedic surgeons moved their surgeries to ASCs where the risk of cancelations is lower.
What are the implications?
- Employers win because ASCs generally have lower facility fees than hospitals, so their joint replacement unit costs will be lower.
- Hospitals lose because lucrative commercially insured patients are now having their joint replacement surgeries outside of their hospital system.
- For-profit hospital system Tenet is transitioning from being a ‘hospital company’ to being an ASC company and now runs 310 ASCs nationwide… more than any other organization. Tenet’s ASC revenue went from 5% of its total revenue in 2015 to 42% of its total revenue in 2021–an almost 9X increase!
As this orthopedic example illustrates, change can be rapid in healthcare when the PAYMENT changes.
SimplePay Health allows employers to take advantage of this trend through $0 deductible, copay-only health plans. SimplePay makes the patient copay less expensive when a patient chooses a high-quality orthopedic surgeon that performs surgery at a more cost-effective ASC as compared to the more expensive hospital setting.