Critics ask, so what? “Why would we not encourage the migration to outpatient if the outcome is the same and the cost is lower?” said Jeff Goldsmith, a national adviser to Navigant Healthcare. Goldsmith, a Medicare beneficiary, recently underwent a hip replacement and recovered so quickly he thinks it could have been done on an outpatient basis. “Why preserve the (inpatient bundling) program if the whole point is to save money for Medicare?” he said.
Until recently, outpatient total joint replacements were rare. Most providers and patients thought a several-day hospital stay was needed because of the pain, mobility and infection risks associated with these major surgeries. Now, when patients' health plans allow it, leading surgeons in this field say they are doing many or most of their joint replacements on an outpatient basis—except for patients who are extremely obese or have unstable chronic conditions. They say even healthy patients in their 70s or 80s can be candidates for outpatient surgery, but careful patient selection is essential.
Many more surgeons are eager to learn these improved clinical processes and start doing joint replacements outside the hospital. “Dr. Hoffman has surgeons and administrators from all over the country come tour and watch our processes two or three times a month,” said Michael Patterson, CEO of the Mississippi Valley Surgery Center, who recommends slow, careful adoption of outpatient procedures. “We advise surgeons that first they need to be able to get patients in and out of the hospital within 24 hours. They can't go straight from three- to five-day stays to 23 hours.”
The emerging outpatient delivery model is driven by both patients' and payers' desire to reduce their costs, increase convenience and satisfaction and diminish the risk of hospital-acquired infections. Orthopedic surgeons say doing joint replacements on an outpatient basis cuts costs nearly in half, although reimbursement is also lower. “People want quality at a reduced cost,” said Dr. Patrick Toy, who has done nearly 250 hip and knee replacements at the outpatient Campbell Clinic in Memphis, Tenn., which he partially owns. “This hits the nail on the head.”
Despite the looming financial threat, many hospitals have not settled on a strategy to address the outpatient migration, particularly where local surgeons have not yet adopted this new practice pattern. In some markets, hospitals and surgeons are starting to collaborate, while in others there may be conflict over who will capture the big dollars from joint replacements, which are surging as the baby boomers move into their creakier years.
“This is coming whether we like it or not, and we have to figure out how to better partner with physician practices to deliver the best care for patients and hopefully protect patient volume for the hospital,” said Kyle Armstrong, CEO of Baptist Memorial Hospital-Collierville, a suburb of Memphis served by Toy's free-standing surgery center. “I can imagine there will be some areas where it is contentious.” His system has considered buying or partnering in a Memphis outpatient surgery center.
In 2014, 23% of 354 hospitals analyzed by the Advisory Board Co. performed at least some outpatient knee replacements, while 7% performed at least some outpatient hip replacements. Experts say those numbers likely have increased in the past two years as more surgeons and their teams gain confidence with new and improved clinical protocols, making it possible to release patients more quickly.
“More hospitals are starting to move joint replacement into outpatient settings to compete with (free-standing) ambulatory surgery centers,” said Shruti Tiwari, a senior consultant at the Advisory Board. “Patients are warming up to the idea, particularly younger and healthier patients who don't have time for a three-day hospital stay and a protracted recovery process.”
“The smart, strategic hospital management teams understand they need to get ahead of this, so that when volume shifts out of their buildings they won't lose patients,” said Brian Tanquilut, a senior healthcare analyst at Jefferies & Co. “That's why the investor-owned hospital companies are making a big push on surgery centers.”
Even at hospitals that are already collaborating with their surgeons on outpatient joint replacements, executives caution that there are problems making outpatient joint replacements financially viable.
“The current ambulatory reimbursement system isn't really sufficient to cover the overall cost of care,” said Michael Dandorph, chief operating officer at Rush University Medical Center in Chicago. He projects that up to 25% of joint replacements may be done on an outpatient basis within five years if Medicare starts paying for them. “On a single-case basis, we're taking a revenue hit. But if it produces better outcomes and lowers the cost, that should attract more patients,” he said.
Orthopedic surgeons say that while they would like to collaborate with hospitals on outpatient joint replacements, institutional inertia makes it hard to implement innovative practices that better serve patients.
Dr. Richard Berger performs nearly 800 outpatient total joint replacement procedures a year, split between Rush University Medical Center's ambulatory surgery unit and the Munster (Ind.) Specialty Surgery Center, a free-standing facility he partially owns. “Even at Rush, which is a great hospital, it's hard to make changes and try new things,” he said. “At the surgery center, I make one phone call and anything I want to do, I can do.”
“You can control costs so much better in the ambulatory surgery center setting,” said Dr. Alexandra Page, who chairs the American Academy of Orthopaedic Surgeons' Health Care Systems Committee and whose practice partner has started doing joint replacements in a free-standing outpatient center in San Diego. “That works for everyone but the hospital.”
Some hospitals, such as Rush and CentraCare Health's St. Cloud (Minn.) Hospital, are responding by working with surgeons to do same-day or
23-hour joint replacement procedures either in hospital-run surgical units or outpatient centers, depending on each patient's needs. Dr. Joseph Nessler and his colleagues at St. Cloud Orthopedics, a 21-physician independent practice group, are doing more than 300 total joint replacements a year on an outpatient basis, divided between the physician-owned St. Cloud Surgical Center and the hospital. The chosen surgical setting is based on each patient's medical condition and whether an overnight stay is needed.