ASC Growth Area: Musculoskeletal Platform

Vertical: Ambulatory Surgery Centers (ASCs)
Author: JC Lupis
Date: December 2019

One of the biggest areas for ASC growth is musculoskeletal and orthopedic surgery. Currently only a small percentage of single-specialty ASCs are devoted to this area, and muscoskeletal/orthopedic services do not figure prominently among the most frequently provided ASC services. However, orthopedic procedures offer higher potential revenues and higher reimbursements than other cases. Surgery Partners, for example, has identified this as an important platform, which – together with pain management – now accounts for 35% of its surgery volume. MedPAC itself has noted that “momentum grows for knee and hip arthroplasty (knee and hip replacement) to be done in ambulatory settings,” and regulatory developments support this trend.

Cost and quality factors align to favor the migration of knee and hip replacements to outpatient settings. Consider that a BCBS analysis of the medical claims of commercially insured members from 2010 through 2017 discovered that:

  • The average price for an outpatient hip replacement was 28% lower than in an inpatient setting ($22,078 and $30,685, respectively); while
  • The average price for an outpatient knee replacement was 37% lower than in an inpatient setting ($19,002 and $30,249, respectively); and
  • The percentage of surgeries in 2017 (latest year available) with any complication was lower in outpatient than inpatient settings for both knee (16.6% and 21.1%, respectively) and hip surgeries (14.0% and 19.3%, respectively).

The BCBS report stated that utilization of knee replacements rose by 17% from 2010 to 2017 and hip replacements by 33% over the same period. In each case adults ages 55-64 (a growing segment of the population) were the main drivers of the increases, accounting for both the largest amount of procedures per 1,000 members and the fastest rates of growth.

And yet perhaps the most important statistics from the report – underpinning the opportunity for ASC growth – relate to the surgery site. Despite their lower cost and better quality, just 11% of knee procedures and 8% of hip procedures were performed on an outpatient basis in 2017. With the recent addition of total knee arthroplasty to Medicare’s ASC payable list and the likely addition of total hip arthroplasty coming, those ASCs that have the scale and infrastructure to take advantage of this opportunity are primed for strong growth in this area.

ASC Market: Key Data Point

There were 5,717 ASCs in 2018, up from 5,216 in 2012.

Source: MedPAC, Report to the Congress: Medicare Payment Policy, March 2020

ASC Market: Key Chart

Share of Outpatient Services Performed in ASCs vs. HOPDs

GHA-ASC-Market-Data

GHA’s ASC Market Brief includes the following sections:

  • ASC Market-At-A-Glance
  • ASC Market Developments
  • Key ASC Market Data
  • Regulatory Trends of Note
  • The Mergers & Acquisitions Landscape

To inquire about a copy, please contact research@ghadvisors.net.