The Rothman Institute of Orthopedics has seen a huge shift towards outpatient joint replacements

When a Rothman Orthopedic Institute surgeon replaced Kathryn Patterson’s left hip in May 2021, the North Cape May resident participated in a massive change in the way joint replacements are performed.

The 78-year-old arrived at AtlantiCare Surgery Center in Egg Harbor Township at 7 a.m. on the day of her surgery and was back home by mid-afternoon. Her only rehab, which she completed with the help of her son, was walking for 10 minutes every hour.

“It was a great experience,” Patterson said recently. “I went in with pain and came out without pain. It’s been like that ever since.”

At the Philadelphia-based Rothman Orthopedic Institute, which is among the largest orthopedic groups in the United States, rapid outpatient joint replacements like Patterson’s are quickly becoming the norm – replacing traditional hospital stays after surgery and adding to the extraordinary financial pressure suffered by hospitals. .

In the first half of this year, 73% of Rothman’s hip and knee replacements were on an outpatient basis, compared to just 14% on an outpatient basis in the first half of 2019. With this change comes significant cost savings. Between 2019 and last year, the average cost to a private insurer for a total joint replacement at Rothman fell to $25,001 from $36,433, according to Rothman data.

The shift to outpatient surgeries, which typically cost 30% to 40% less than the same surgery performed in hospital, has been changes in Medicare rules, the general shift away from inpatient care – in overdrive during the coronavirus pandemic, and long-standing improvements in medical care.

“It’s a convergence of market forces,” said Matthew Bates, chief executive of Kaufman Hall, a health care consulting firm in Chicago. “We can do it safely. We can do it cheaper. Patients have a better experience. Doctors, surgeons tend to prefer it. Insurers encourage it.

But what is good for patients, doctors and insurers is to increase the financial pressure on hospitals. This is especially true for community hospitals which do not provide the most complex levels of care, but which are good sources of employment and often provide a sense of security to their communities. Even in large academic centers like the University of Pennsylvania Health System, change adds financial stress.

The problem for hospitals is worse than simply losing outpatients, said Bates, the Kaufman Hall expert. Private insurers have taken the lead from Medicare and are now increasingly pushing joint replacements to outpatient surgery centers, he said.

“It’s really relevant when talking about the impact on hospitals because it’s not just about volume loss. It’s that they disproportionately lose the highest margin volume,” Bates said.

According to Moody’s, only 3% of the country’s approximately 6,000 outpatient surgery centers are directly owned by hospitals. Doctors own 64%. Physician-hospital joint ventures hold an additional 24%. The companies hold the remaining 8%, either alone or in joint ventures. This means that hospitals benefit relatively little from the growth of surgical centres. Many outpatient joint replacements are performed in a hospital operating room but without hospitalization, which means hospitals have lower reimbursement but the same level of costs.

The overall shift to day surgery is having a significant impact on the financial results of the University of Pennsylvania health system, the organization’s vice president of finance, Thomas Cooper, told a board meeting. administration of the university on September 22. He said the profit margin on an inpatient surgery is much higher than for a patient hospitalized with a chronic illness. Penn calls them medical patients.

“We used to be able to bridge this shift from inpatient to outpatient with additional inpatient surgeries, but now we’re seeing that replaced with medical admissions, so it’s a big change and a challenge for the healthcare system,” Cooper said.

Health System Chief Executive Kevin Mahoney added: “Technological changes will continue to push and reimbursement changes will continue to push surgeries towards the outpatient setting. We need to reduce our costs so that we can still be profitable this way. »

Rothman executives, who have close ties to Jefferson Health, Main Line Health and AtlantiCare, said they are keeping the financial health of their hospital partners in mind as the physician-owned business grows.

“We’re not in business like private equity firms to just pull all the cases out of the hospital and leave them with no way to support their community mission,” Rothman CEO Christopher T. Olivia said. “We are trying to develop the spine department and the trauma department with our partner hospitals, so they can fill those inpatient beds, because those departments still need acute care facilities.”

Not every joint replacement patient is in the kind of physical condition that allowed Patterson to return home and recover so quickly, let alone have a son who could help her.

“One of the challenges is having enough support at home to be able to go home after the procedure,” Olivia said. He said Rothman was urging Medicare to pay more for home support. That way, patients can go home right after surgery because they’re likely to have better outcomes if they do, he said.

Patterson said her doctor, Danielle Ponzio, informed her that she was well placed for an outpatient hip replacement. “The doctor said as long as I didn’t have any heart issues or other issues, I would be a good candidate to do it in one day, and that was awesome,” Patterson said.

“It was like being at Disney. When I walked into the operating room, I was introduced to every single person there, and they seemed so happy,” Patterson said.

“The best medical decision I ever made was to do this,” she said.

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