Service Line Update: Orthopedic Surgery - A Shifting Industry

By William “BJ” Krech, III, system director, orthopedic and surgery service line strategy and business development, Premier Health

Across the nation, orthopedic surgery has seen a dramatic shift from inpatient surgery to outpatient surgery, particularly for total joint replacements. The Southwest Ohio market is no different. From 2020 to 2021, our primary service area has seen a 6.4% increase in outpatient orthopedic surgery and a staggering 38% increase in outpatient total joint replacement surgeries. Furthermore, forecasting experts from Sg2 predict an 18% decline in inpatient orthopedic surgeries over the next 10 years and a 7% increase on the outpatient side.

For Premier Health and many other health systems nationwide, the shift to outpatient cases has caused a significant reduction in reimbursement and thus a reduction in net revenue per case. For example, Premier’s volume of total knee arthroplasty (TKA) and total hip arthroplasty (THA) were up 473 cases in 2021 versus two years prior in 2019, yet overall contribution margin for these cases was down.

The phenomenon of a shift to outpatient surgery (in many cases with same-day discharge) within the orthopedic industry and its impact to reimbursement has helped define our 2022 strategic priorities for the service line:

• Expand same-day protocols and processes on same-day total joints
  • Tier 3 same-day surgery guidelines
  • Includes spine, shoulder, and other procedures
  • Reduce cost by reducing length of stay (LOS) at facility
• Strong ambulatory surgery strategy
  • Continued pursuit of outpatient surgery center development, particularly at centers with high orthopedic surgical volume
• Explore value-based contracting and alternative payment models
  • Condition- or procedural-based bundled payment models
  • Direct-to-employer contracting
• Respond to increase in consumerism
  • Expand access through walk-in availability, orthopedic urgent care, utilization of open scheduling and telehealth, and align with the digital transformation

Committees across orthopedic groups and various campuses have been formed to tackle these priorities, as well as physician leaders appointed to help drive growth through program development. As we continue to adjust to industry trends, we are grateful for the hard work from these teams and excited to see the continued evolution of orthopedics at Premier Health.

Back to the August 2022 issue of Premier Pulse