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Ambulatory surgical centers (ASCs) play an increasingly important role in orthopedic companies’ strategies as they seek to capitalize on the growing number of procedures shifting to outpatient settings.
Sg2, a Vizient company, forecasted service line trends from 2024 to 2034 in their 2024 Impact of Change report. Their analysis for inpatient orthopedic and spine service lines shows population-based forecast growth of 16%, but Sg2 analysis projects discharges at -7% over the next decade. Subsequently, their outpatient orthopedic and spine service lines show a 12% population-based forecast, but Sg2 forecasts an 11% growth in the number of encounters.
“Surgeons are getting more comfortable performing complex procedures in these sites of care,” said Donnelle Jageman, Director of Intelligence – Orthopedics at Sg2. “If you told somebody five years ago that the majority of hip replacements would be performed outpatient, they probably would have scoffed at you. We have to push the boundaries of possibilities in these settings.”
Orthopedic companies are responding to this trend by streamlining product portfolios and selling approaches, but the ASC landscape requires a nuanced strategy, Ms. Jageman said. We asked her to share important numbers and context about the ASC orthopedic procedure shift.
120 New ASCs
When you account for all medical disciplines, there are more than 11,500 ASCs in the U.S. The number of ASCs and orthopedic procedures performed in those facilities varies across the country. Orthopedic companies need to understand the ASC landscape in their current and future markets.
Sg2 tracked the opening of 120 new ASCs in 2023, Ms. Jageman said. California, Texas, Wisconsin and Florida were hotspots for growth last year, and North and South Carolina, Mississippi and Georgia have burgeoning markets due to Certificate of Need changes. A market’s commercial payors also play a role in the procedure shift, she said.
Understanding the type of procedures and the number of surgeries performed in key markets will help orthopedic companies gauge ASC capacity and how quickly procedures could move out of local hospitals.
“There are so many dynamics that influence the outpatient shift,” Ms. Jageman said. “You need to look at each specific market, understand what’s already being done in that area and then talk to physicians about which procedures they would be willing to move to ASCs if they could. Often the shift is up to physician preference.”
2 Operating Rooms
Another factor to pay attention to is facility size. Sg2 analysis based on data from the Centers for Medicare & Medicaid Services shows that 34% of ASCs have two ORs and 31% have three or four ORs. The percentage drops below double digits as the number of ORs increases to five or more.
Most of the orthopedic procedures expected to benefit from moving to ASCs, such as joint replacements and spinal fusions, don’t fit well in legacy centers, Ms. Jageman said. She believes the biggest barrier to ASC adoption remains that small facilities are trying to perform orthopedic procedures that require large implant and instrument systems and capital equipment.
Orthopedic companies continue to iterate their product portfolios by condensing the number of implants and instruments they need to bring into the OR. There is still work to be done, Ms. Jageman said, and noted the increasingly important role that robotics plays in joint replacement and spine.
“We continue to see an increased prevalence of robotics in orthopedics. Fellowship programs use robots as a recruiting and teaching tool,” Ms. Jageman said. “The robots are huge capital investments and primarily sit in the inpatient space. Physicians who perform most of their knee replacements with a robot are not going to be convinced to take their patients off campus if there’s not a robot.”
The balancing of resource investments plays a large role in the success of procedure adoption in ASCs, Ms. Jageman added.
90% Physician Owned
ASCs appeal to orthopedic surgeons who want a greater say in day-to-day operations and implant decisions, as well as financial ownership in a business.
Physicians have sole or part ownership in 90% of ASCs, according to Ms. Jageman. The number of ASCs with sole-physician ownership declined from 2020 to 2023, while the number of physician-corporate owners, which include physician conglomerates and private equity ownership, rose.
There is also greater activity in the number of hospital-physician-owned or hospital-owned ASCs. “We’re seeing hospitals use ASCs as an alignment tool with providers in their market,” Ms. Jageman said. “Hospitals are investing in or becoming part owners of surgery centers.”
Orthopedic companies need to understand who runs the ASCs in their markets because the model dictates the type of decision maker and, ultimately, the type of sales strategy.
“Physician partners can be very influential,” Ms. Jageman said. “We often see that physician-owned ASCs are more willing to try different products if there’s a discount offered. Even if they’ve used the same product for a long time, physician owners are more willing to give a new product a try if there’s an incentive because the decision directly impacts their pocket.”
Ms. Jageman said that she’s also seen orthopedic companies offer solutions outside of implants and equipment to help hospitals overcome barriers to adoption with ASCs. This approach benefits physician-owned ASCs that may have fewer resources and allows companies to boost their market share.
“We’ve seen an increase in data as a service, where companies are providing analysis of utilization and socioeconomics,” she said. “Companies are offering offsite sterilization and day-of-surgery delivery services. Not every manufacturer can make these investments, but if you’re trying to enter or get a stronghold in a market, there are options for helping health systems and physician owners solve problems that are impeding the use of your device.”
Room for Growth
The shift in surgeries from inpatient hospitals to ASCs will remain a huge market driver for orthopedics over the next decade due to the ability to decrease procedure costs and improve patient outcomes. Orthopedic companies can stay competitive by remaining keenly aware of the ways this trend impacts their surgeon and hospital customers.
“The ASC shift isn’t the end of where orthopedics is heading,” Ms. Jageman said. “We’re going to see more office-based procedures as microsurgery technology advances. The movement of cases to office-based procedure rooms might not be as exciting a trend as outpatient total joint replacement, but there is a lot of volume in these procedures and they can still be very profitable for health systems and orthopedic companies.”
Ambulatory surgical centers (ASCs) play an increasingly important role in orthopedic companies’ strategies as they seek to capitalize on the growing number of procedures shifting to outpatient settings.
Sg2, a Vizient company, forecasted service line trends from 2024 to 2034 in their 2024 Impact of Change report. Their analysis for...
Ambulatory surgical centers (ASCs) play an increasingly important role in orthopedic companies’ strategies as they seek to capitalize on the growing number of procedures shifting to outpatient settings.
Sg2, a Vizient company, forecasted service line trends from 2024 to 2034 in their 2024 Impact of Change report. Their analysis for inpatient orthopedic and spine service lines shows population-based forecast growth of 16%, but Sg2 analysis projects discharges at -7% over the next decade. Subsequently, their outpatient orthopedic and spine service lines show a 12% population-based forecast, but Sg2 forecasts an 11% growth in the number of encounters.
“Surgeons are getting more comfortable performing complex procedures in these sites of care,” said Donnelle Jageman, Director of Intelligence – Orthopedics at Sg2. “If you told somebody five years ago that the majority of hip replacements would be performed outpatient, they probably would have scoffed at you. We have to push the boundaries of possibilities in these settings.”
Orthopedic companies are responding to this trend by streamlining product portfolios and selling approaches, but the ASC landscape requires a nuanced strategy, Ms. Jageman said. We asked her to share important numbers and context about the ASC orthopedic procedure shift.
120 New ASCs
When you account for all medical disciplines, there are more than 11,500 ASCs in the U.S. The number of ASCs and orthopedic procedures performed in those facilities varies across the country. Orthopedic companies need to understand the ASC landscape in their current and future markets.
Sg2 tracked the opening of 120 new ASCs in 2023, Ms. Jageman said. California, Texas, Wisconsin and Florida were hotspots for growth last year, and North and South Carolina, Mississippi and Georgia have burgeoning markets due to Certificate of Need changes. A market’s commercial payors also play a role in the procedure shift, she said.
Understanding the type of procedures and the number of surgeries performed in key markets will help orthopedic companies gauge ASC capacity and how quickly procedures could move out of local hospitals.
“There are so many dynamics that influence the outpatient shift,” Ms. Jageman said. “You need to look at each specific market, understand what’s already being done in that area and then talk to physicians about which procedures they would be willing to move to ASCs if they could. Often the shift is up to physician preference.”
2 Operating Rooms
Another factor to pay attention to is facility size. Sg2 analysis based on data from the Centers for Medicare & Medicaid Services shows that 34% of ASCs have two ORs and 31% have three or four ORs. The percentage drops below double digits as the number of ORs increases to five or more.
Most of the orthopedic procedures expected to benefit from moving to ASCs, such as joint replacements and spinal fusions, don’t fit well in legacy centers, Ms. Jageman said. She believes the biggest barrier to ASC adoption remains that small facilities are trying to perform orthopedic procedures that require large implant and instrument systems and capital equipment.
Orthopedic companies continue to iterate their product portfolios by condensing the number of implants and instruments they need to bring into the OR. There is still work to be done, Ms. Jageman said, and noted the increasingly important role that robotics plays in joint replacement and spine.
“We continue to see an increased prevalence of robotics in orthopedics. Fellowship programs use robots as a recruiting and teaching tool,” Ms. Jageman said. “The robots are huge capital investments and primarily sit in the inpatient space. Physicians who perform most of their knee replacements with a robot are not going to be convinced to take their patients off campus if there’s not a robot.”
The balancing of resource investments plays a large role in the success of procedure adoption in ASCs, Ms. Jageman added.
90% Physician Owned
ASCs appeal to orthopedic surgeons who want a greater say in day-to-day operations and implant decisions, as well as financial ownership in a business.
Physicians have sole or part ownership in 90% of ASCs, according to Ms. Jageman. The number of ASCs with sole-physician ownership declined from 2020 to 2023, while the number of physician-corporate owners, which include physician conglomerates and private equity ownership, rose.
There is also greater activity in the number of hospital-physician-owned or hospital-owned ASCs. “We’re seeing hospitals use ASCs as an alignment tool with providers in their market,” Ms. Jageman said. “Hospitals are investing in or becoming part owners of surgery centers.”
Orthopedic companies need to understand who runs the ASCs in their markets because the model dictates the type of decision maker and, ultimately, the type of sales strategy.
“Physician partners can be very influential,” Ms. Jageman said. “We often see that physician-owned ASCs are more willing to try different products if there’s a discount offered. Even if they’ve used the same product for a long time, physician owners are more willing to give a new product a try if there’s an incentive because the decision directly impacts their pocket.”
Ms. Jageman said that she’s also seen orthopedic companies offer solutions outside of implants and equipment to help hospitals overcome barriers to adoption with ASCs. This approach benefits physician-owned ASCs that may have fewer resources and allows companies to boost their market share.
“We’ve seen an increase in data as a service, where companies are providing analysis of utilization and socioeconomics,” she said. “Companies are offering offsite sterilization and day-of-surgery delivery services. Not every manufacturer can make these investments, but if you’re trying to enter or get a stronghold in a market, there are options for helping health systems and physician owners solve problems that are impeding the use of your device.”
Room for Growth
The shift in surgeries from inpatient hospitals to ASCs will remain a huge market driver for orthopedics over the next decade due to the ability to decrease procedure costs and improve patient outcomes. Orthopedic companies can stay competitive by remaining keenly aware of the ways this trend impacts their surgeon and hospital customers.
“The ASC shift isn’t the end of where orthopedics is heading,” Ms. Jageman said. “We’re going to see more office-based procedures as microsurgery technology advances. The movement of cases to office-based procedure rooms might not be as exciting a trend as outpatient total joint replacement, but there is a lot of volume in these procedures and they can still be very profitable for health systems and orthopedic companies.”
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Carolyn LaWell is ORTHOWORLD's Chief Content Officer. She joined ORTHOWORLD in 2012 to oversee its editorial and industry education. She previously served in editor roles at B2B magazines and newspapers.
