Changes In The Healthcare Market And Their Impact On Hip And Knee Replacement

Mar 29, 2021

As baby boomers have reached the age of Medicare eligibility and the demand for joint replacement continues to increase, the Center for Medicare Services (CMS) is shifting toward value-based care. This is defined as care that can deliver high quality at a lower cost. In 2020, CMS approved total knee replacement to be performed at ambulatory surgery centers, and in 2021, total hips were similarly approved. This move recognizes the savings that surgery centers can realize due to increased operational efficiency and same-day discharge. Abundant clinical data has demonstrated the safety of outpatient joint replacement in the ambulatory surgery center setting provided a well-coordinated program, physician and care team experience and proper patient selection and preparation. Consequently, CMS will soon incent surgeons to shift joint replacement cases to surgery centers by offering reimbursement incentives compared to hospital-based care.

Similarly, in the commercial insurance market, there are numerous forces at play that are shifting patients to ASCs. These include the following:

  • Rising out of pocket expenses that favor lower cost care
  • Reimbursement incentives similar to those that Medicare is providing
  • Deals between surgery center management companies and physician management companies that create narrow networks
  • A rise in the number of self-insured companies that provide health coverage to employees and benefit from lower cost care
  • The growing popularity of the bundled payment model that provides price transparency 

Forward estimates project that by 2026, 51% of all joint replacements will be performed in the surgery center environment. This could potentially lead to billions of dollars in savings for payers including CMS. 

Preparation for this major transition in joint replacement care requires that centers begin preparations now to handle the increased complexity of these cases. This includes not only better care coordination for the patients but also better operations management for the center to maximize efficiencies as more volume pushes to these centers.

Drs. King and Parsons are ahead of the curve when it comes to this transition. With over 2000 combined outpatient joint replacements in the past several years, our team has experience in managing same day joint replacement that is largely unparalleled in New England. This includes several hundred joint replacements performed in the ambulatory surgery center setting. Of these surgery center joint replacements, we have a 0% infection rate and 0% readmission to the hospital rate. We have also successfully expanded into the bundled payment market with a program called PACE that provides 90-day, full episode of care management for outpatient hip and knee replacements. Our AVATAR rapid recovery program has positioned our practice to be leaders in the field as healthcare changes toward value-based care.