CMS' proposed pay updates won't stunt ASC total joint growth — 9 observations

Alan Condon -

About 1 million total joint replacements are performed in the U.S. each year, and that number is expected to more than double by 2030.

Recent CMS payment updates and more studies demonstrating the safety and efficiency of total joint replacements at ASCs have accelerated the migration of these procedures to the outpatient setting, and it's no secret that total joints are a lucrative and key growth area for ASC companies.

Nine notes on the growth of total joints at ASCs:

1. There are more than 510 ASCs that perform total joint replacements in the U.S. California, Maryland and Texas are the most densely populated states when it comes to ASCs performing these procedures.

2. The number of ASCs offering outpatient total joint replacements increased from 25 in 2014 to more than 200 in 2017.

3. The growth of total joints at ASCs has also been boosted by the COVID-19 pandemic as more surgeons looked to perform these cases at surgery centers because the facilities did not treat COVID-19 patients.

"One of the things [the pandemic] has shown on the positive side is the fact we have a decentralized healthcare system where you have places like surgery centers or off-campus HOPDs that are away from the main hospital," Bill Prentice, CEO of the Ambulatory Surgery Center Association, told Becker's. "That's proven to be a really good thing. It's allowed the hospital to take care of patients impacted by the pandemic and then still have other sites of service away from those patients hospitalized with COVID-19 where [patients] can still get care."

4. CMS and commercial payers are also driving total joint replacement procedures to the outpatient setting, and with good reason. The movement of surgical procedures from an inpatient setting to an outpatient setting saves commercial payers $38 billion and CMS $2.5 billion annually, according to an Ambulatory Surgery Center Association study.

5. Over the past two years, the big ASC management companies have seen significant growth of total joint replacement procedures at their surgery centers, and that's not expected to change any time soon. Surgery Partners, with a revenue of $543.3 million in the second quarter, saw total joint replacement revenue almost double at ASCs in 2020 compared to 2019. That growth has continued into 2021, despite the COVID-19 pandemic, and increased 144 percent year over year in the second quarter.

"Our total joint replacement growth is buoyed by our surging robotics case volume, with cases associated with our investments up 72 percent year-to-date versus the prior year," according to Wayne DeVeydt, executive chair of the board at Surgery Partners. "All of this comes together with strong 45 percent same-facility revenue growth with volumes up nearly 68 percent  over the prior-year quarter."

6. While CMS' 2022 outpatient proposal outlines plans to return many musculoskeletal-related procedures to its inpatient-only list, ASC executives don't predict the move will stifle the growth of outpatient total joints.

"We believe the key takeaway from the CMS guidance is that after an extensive study under a new administration, this is, in effect, an affirmation of the outpatient setting being the right setting for total joint and various cardiac procedures," Mr. DeVeydt said. "CMS has been a proponent and supporter of our business model, and we do not expect that trend is changing or has changed."

7. About half of the total joint replacements performed in the U.S. by 2030 are expected to go through CMS, according to executives at Surgery Partners, which is bolstering its ASC network in preparation for this projected growth.

"Inside our numbers inside the second quarter, I'd say just about one-third of our volume in the ASCs is Medicare total joints, and that's up three times over where it was last year," said Tom Cowhey, executive vice president and CFO. "We continue to think that that trend will continue and potentially even improve. And we've been building out our facilities and investing capital to ensure that we're capable of capturing that trend."

8. Total joints and spine continued to be a key factor driving growth at Dallas-based United Surgical Partners International. USPI in the second quarter added 25 news service lines across its network, many of which were spine and total joints. The company's total joint business increased 21 percent compared to the second quarter of 2020.

9. About 969,000 (51 percent) of hip and knee replacements will be performed in an outpatient setting by 2026 — up from 165,000 (15 percent) in 2016, according to Sg2 Research. This represents an increase of 487 percent.

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.