For independent orthopedic surgeons, owning a surgery center was once a way to get ahead. Increasingly, it may be the only way to keep up.
As physician reimbursement declines and the cost of running a practice continues to climb, Justin Deen, MD, a joint replacement surgeon at Tampa-based Florida Orthopaedic Institute, who practices in Gainesville and Ocala, Fla., sees a fundamental shift taking hold. The financial advantages that once distinguished successful orthopedic groups are becoming essential to their survival.
“You almost have to have ownership in a surgery center in order to, not even thrive, but to survive,” Dr. Deen told Becker’s.
It is a striking reversal for a specialty that has benefited enormously from the migration of procedures into outpatient settings. Joint replacements can now be performed more efficiently, with shorter stays and greater convenience for patients. Yet, the same transition is unfolding against a backdrop of shrinking professional fees, rising expenses and mounting pressure to consolidate.
For surgeons hoping to remain independent, the question is no longer simply how to grow. It is how to build a practice that can withstand what comes next.
The changing economics of outpatient surgery
Dr. Deen has been performing outpatient joint replacements since 2017, beginning in an academic hospital setting before transitioning to a hospital outpatient department and eventually a freestanding ASC.
Today, approximately 90% of his patients undergo outpatient surgery, with roughly 60% to 70% of those procedures performed at surgery centers.
His enthusiasm for the model extends beyond its financial advantages. He believes ASCs can offer patients a more personalized experience, particularly as advances in surgical techniques and standardized protocols make successful procedures increasingly routine.
“Joint replacement, in my opinion, is an experiential procedure as much as anything else,” he said.
The interactions with staff, the facility environment and the quality of follow-up care all shape how patients perceive their treatment. In those areas, he believes surgery centers often have an advantage.
But the economics driving the transition are becoming increasingly difficult to ignore. Dr. Deen pointed to the widening pressure between declining physician professional reimbursement and facility payments, which have generally increased. For surgeons with ownership stakes in ASCs, facility revenue can help offset some of the financial strain on their practices.
For those without that opportunity, the equation is considerably harder. Private practices must cover staffing, supplies, medications and other operating expenses even as reimbursement for physicians’ services comes under pressure. Historically, many have relied on ancillary revenue from imaging, therapy and durable medical equipment to remain profitable.
Now, Dr. Deen believes surgery center ownership is becoming another essential piece of that equation. The concern is that financial sustainability could begin influencing decisions that should remain primarily clinical.
“It’s a slippery slope to start making financial decisions at the expense of quality,” he said.
The limits of the outpatient frontier
That tension is particularly apparent as increasingly complex joint replacement procedures move into ASCs. Dr. Deen has gradually expanded the types of cases he performs in surgery centers, drawing on years of experience managing outpatient patients and working with established surgical teams. Approximately one-quarter of his revision procedures are now performed at ASCs. But he cautioned against assuming that what works for one surgeon or facility will necessarily work for another.
“At the surgery centers, you don’t have all of the bells and whistles that you have at a hospital,” he said.
Complications can still occur, and successfully managing them requires experience, preparation and confidence in the capabilities of the entire team. The challenge, he believes, is determining how far outpatient surgery can safely expand before the financial incentive to move cases begins to outpace clinical readiness.
“Right now, we’re in uncharted territory, figuring out how far we can safely push the limits and which cases are still best suited for the hospital,” he said. Those boundaries are likely to evolve as technology and surgical capabilities improve. But for Dr. Deen, experience and patient selection remain more important than maximizing the number of procedures performed outside hospitals.
When ASCs start operating like hospitals
The financial advantages of ASCs may not be permanent, either. Dr. Deen anticipates that broader adoption of site-neutral payment policies could eventually place downward pressure on facility reimbursement, forcing surgery centers to become even more disciplined about expenses. The result could be a new operating reality in which ASCs increasingly resemble the hospitals they have helped move procedures away from.
“ASCs will almost function like small hospitals in a lot of ways,” he said.
That means evaluating the costs of implants, medications, enabling technology and other resources with the same scrutiny traditionally applied by larger health systems. For surgeons, it could also change how they approach innovation. New technology will need to demonstrate not only clinical value but also whether its benefits justify the investment.
Dr. Deen expects financial considerations to become more central to these decisions as pressure builds on both professional and facility revenue. The challenge will be finding efficiencies without compromising the outcomes that made outpatient joint replacement successful in the first place.
Why size may determine who survives
Beyond the operating room, Dr. Deen sees another transformation accelerating: the disappearance of smaller independent orthopedic practices. He expects consolidation to become increasingly common as groups seek the scale necessary to negotiate payer contracts, manage administrative expenses and support ancillary services.
“I think you’re probably going to see very few small practices,” he said, referring to groups with fewer than 10 physicians.
His own practice has nearly 200 physicians, a size that provides advantages smaller organizations may struggle to replicate. Scale alone, however, is not the entire strategy. Dr. Deen also sees opportunities for practices to develop services such as bone health programs, infusion clinics and regenerative medicine, provided those offerings are supported by evidence and meet patients’ needs. Still, he considers ASC ownership among the most consequential financial opportunities available to independent surgeons.
Employed physicians face a different challenge. Although they may benefit from the stability of a salary, they generally have fewer opportunities to diversify their individual income through facility ownership or ancillary services. As productivity expectations rise and reimbursement remains under pressure, Dr. Deen believes those physicians could face difficult trade-offs without having the same ability to influence their financial circumstances.
“They’re still going to face either higher productivity targets or lower salaries, without much ability to change their circumstances,” he said.
The case for thinking like an owner
Dr. Deen’s perspective on physician independence is shaped by his own career. After years in academic medicine, he left with nine colleagues to pursue private practice. He valued his academic experience, but the desire to make his own business decisions ultimately became impossible to ignore.
“I don’t care, good decisions, bad decisions. I just want them to be my decisions,” he recalled telling his partners.
That independence remains one of the most rewarding aspects of private practice. But preserving it now requires physicians to think beyond the immediate demands of patient care. Administrative responsibilities, compliance requirements and productivity pressures can leave surgeons with little time to consider the larger forces reshaping their businesses. Dr. Deen believes that has to change.
“At the end of the day, we’re small business owners as private practice physicians,” he said. “Every so often, we have to lift our heads above water, look toward the horizon and start thinking strategically about what’s coming.”
He sees the current environment as a call for more deliberate physician leadership, not simply a race to increase surgical volume or pursue new revenue streams. The distinction matters. For Dr. Deen, financial sustainability is not separate from the responsibility to deliver high-quality care. It is what makes that responsibility possible.
“In order to care for patients, we have to exist,” he said. “If there’s no practice, there’s no healthcare.”
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.
