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The shift of orthopedic and spine procedures away from the hospital to the ambulatory surgery center (ASC) continues to gain momentum, pushing orthopedic companies to strategize how to respond to this growing care setting. ASCs are smaller, more nimble operations whose needs differ from the more bureaucratic and complex hospital. ACSs often have a smaller footprint, less procedure volume and lower reimbursement rates, all of which make for unique challenges for orthopedic companies.
We pulled together influential voices on ASCs to understand what is driving the growth, which procedures are shifting and what challenges companies and surgeons face in the ASC environment.
Analysts Explain What’s Driving the Change
Numerous factors, including healthcare dynamics, regulatory pressure and patient savviness, have accelerated the shift of procedures to ASCs. However, the change is very market-specific—growth is not taking place at a blanket speed across the U.S., said Ryota Terada, Director, Orthopedics and Payment & Policy at Sg2, a healthcare intelligence firm.
Federal, state and local regulations have guided the embracement of ASCs in the market, Terada said. But it’s more nuanced than that. Restrictions for the patient population, like urban centers where it might be more challenging for patients to get around, or the competitive landscape are driving the pace of ASC expansion in specific markets.
“According to Sg2 commercial claims data, markets or states such as Indiana or Colorado are leading the shift and already performing over 30% of their market’s commercial joint replacement cases in an ASC. Many other states’ markets are still in the single digits, and the outpatient shift today for complex procedures has primarily been a change of status due to length of stay reduction and policy changes rather than maybe moving out of hospital-based settings quite yet,” Terada said.
In saying all of that, the onset of COVID-19 is accelerating the shift across markets, pushing hospitals and surgeons who weren’t considering ASCs to consider them and those that are running them thinking about increasing volume, Terada said.
“When you think about orthopedics and spine in particular, we know that we already have a pretty substantial portion of procedures nationally that are happening in an ASC. Even pre-pandemic 2019, maybe around a third or so of ortho and spine procedures were happening in that setting, maybe a little bit less for spine, a little bit more for orthopedics,” said Kate Zentner, Director of Neuroscience Intelligence, Sg2. “But that is all poised to change.”
Zenter noted that ASCs would no longer be reserved for procedures like arthroscopies, carpal tunnel, and minor fractures in the future. More complex procedures will move to this setting.
The market growth means that ASC operators will have a different level of sophistication based on how long their center has been up and running and what type of procedures they’re performing. All essential things for orthopedic companies to consider as they think of their strategies and customer base.
As companies are strategizing for different markets and different centers, they need to consider the needs depending on where they are in the transition of procedures.
Gain greater insight from industry voices. Watch the ASC Strategy and Orthopedic Executive webinars on-demand from OMTECexpo.com.
Orthopedic Companies Share their Strategies
Orthopedic companies of all sizes and across all markets are considering how to meet the demands of the growing ASC market.
Paragon 28 on the Foot and Ankle Market
The market needs to be considered by its subunits, said Albert DaCosta, President, CEO and Co-Founder, Paragon 28. While bunions might be appropriate for the surgery center environment, Charcot procedures are often plagued with comorbidities and complexities that don’t make patients ideal candidates for the outpatient setting. DaCosta said he expects more total ankle replacements to move to the surgery center, as those patients tend to look for a more personalized and comfortable environment.
Much of the conversation has been placed on margins due to lower reimbursement at the ASC. “I always say if we can sell products effectively in Europe, then we can support the surgery center environment here,” DaCosta said. “The United States is around 55% to 58% of the global foot and ankle market.”
Medtronic on the Role of Technology in Spine
Historically, simpler spine procedures like decompressions and ACDFs have been done in ASCs, said Jacob Paul, SVP, President of Spinal and Cranial Technologies, Medtronic. Today, more complex surgeries are moving to ASCs, because all stakeholders – patients, healthcare providers and payors – realize the benefits of procedures being conducted in this setting. A major driver for spine will be an increase in minimally-invasive procedures.
“The other part of this equation is technology and automation,” he said. “Robotic-assisted procedures are very conducive to minimally invasive spine because of their accuracy, which reduces complications.
“While robotic-assisted surgery will help drive that trend, we have to work with ASCs from a financial perspective. We are looking at financial options that would work with ASCs.”
MicroPort Orthopedics on Managing Joint Replacement Patients Post-Procedure
Joint replacement is seeing a significant push towards the ASC, driven by an opening in reimbursement toward hip and knee procedures, said Benny Hagag, President, MicroPort Orthopedics.
“The challenge for many surgeons is the unfamiliar territory,” he said. “Many of them are used to working in a hospital where they get full services, and now they are in an unfamiliar private setting where they’re essentially part owners. They have to focus on managing the complete services to the patients.”
MicroPort has identified an opportunity to partner with ASCs to develop a program called Pathways, which is intended to help ASCs build tools that allow them to approach, recruit and manage the patient, The company also partnered with PatientIQ to provide patient monitoring and tracking services to assist in the whole episode of care.
“We are in the double digits with respect to the volumes of procedures that are done in ASCs compared to the inpatient settings in hospitals,” Hagag said. “It’s a significant shift that’s going to continue growing quite aggressively over the next few years.”
Smith+Nephew on Managing All ASC Needs
Smith+Nephew’s research showed that ASCs need assistance not only in managing procedures but in managing the business, said Laura Rector, the company’s Vice President of Ambulatory Surgery Centers. Smith+Nephew’s Positive Connections division has nearly 100 employees dedicated to providing ASCs tools.
“It’s more of a business-solutions contact where you do have direct contact to someone like me and a team of people who will come in, study what you’re doing, and apply the resources that we have to develop something if we don’t have it or if we have a solution, then to help you deploy that solution,” Rector said. “It has little or nothing to do with the robot or the implants.”
Smith+Nephew invested in three acquisitions to develop a digital health patient care management specifically for ASCs. The ARIA platform is meant to streamline the surgical and clinical episode, provide patient/provider communication, generate outcomes data, offer remote patient therapy, and more.
Of course, the company’s joint replacement division is also focused on streamlining the procedure for ASCs, looking for ways to decrease inventory and streamline reprocessing. In 2020, Smith+Nephew launched its latest robot, CORI.
“It’s a very unique robotic solution and much more affordable but also feature-rich,” Rector said. “We believe there’re two reasons why an ASC would want to invest in robotic technology. It can help them be more efficient, and more cases can be done in a day if you have a robotic product. And then also patients are looking for ASCs to differentiate themselves with new technologies. A lot of them are very consumer savvy shopping and ASC wanting to know, ‘Do you the latest and greatest technology?’”
Surgeon Talks Building Orthopedic Company Relationship
DISC Sports & Spine Center recently opened its third location in Southern California. Robert S. Bray, Jr., M.D., a neurological spine surgeon and Founding Director of the ASC, said the most significant clinical advancement for his company has been the development of minimally invasive procedures.
“I think it’s an overused marketing term, but it’s a philosophy of how you handle the procedure from the choice of the procedure to how you handle the tissues,” he said. “We are a very microscopy-driven facility.”
This directive has required a rethinking of instruments.
“We’ve been working with [orthopedic companies] extensively trying to redesign things to fit our environment, smaller sets, less bulk in our SPD, better fitting for the procedures we do,” Dr. Bray said. “But it’s been the microscope things such as percutaneous screws, and all of the techniques that allow us to be less invasive, those things all result in a better quality outcome and a happier patient.”
In order for the shift of procedures to ASCs to be successful, orthopedic companies need to “participate in the curve” by developing products and relationships that specifically meet the needs of ASCs, Dr. Bray said.
The old surgeon/sales rep model doesn’t work in the ASC environment, said Dr. Bray. He proposed a direct contact at corporate or a connection that can build a deep understanding of how the ASC functions and the overall needs the orthopedic company can deliver. Providing specifics, Dr. Bray mentioned understanding when materials need to be delivered due to no overnight or day-of processing and knowledge of an ASCs case costing and billing cycle.
Payors are encouraging physicians and patients to seek care at ASCs. Dr. Bray said DISC is the number one referral for some payors. To continue its success with business efficiency and patient outcomes, it needs to partner with orthopedic companies.
“We need to work together,” Dr. Bray said. “It requires the integration of the teams, simply put.”
Conclusion
Procedures are shifting to the outpatient setting and specifically ASCs. While orthopedic companies are naturally focused on product development of instruments, implants and technology, success in this environment will require building strong relationships to understand the pain points of individual ASCs. Further, orthopedic companies have extended their portfolios to consider services, and ASCs are a ripe set of customers for those needs.
As Rector noted, R&D looks a lot different today. Yes, R&D will continue to evolve to optimize products for procedures., but the opportunity extends well beyond the O.R.
