Good morning, everybody. Great to be together again, right? Yeah? Even so early in the morning. But before I dive into this surgery center thing, I'd like to go back to something that Hussein Akousi said at the beginning of his talk. He's one of a handful of very dedicated doctors who volunteer their time to try to advocate for the value that we bring to healthcare. And he said, we fight as hard as we can to make sure that our value doesn't go down. Think about that for a second. Our value doesn't go down. Now, last time I looked, inflation was about 5%. So I mean, we're fighting a losing battle with CPT. And as we continue to value our services through a CPT-based system, we're going to continue to lose. And so one of the things I'm going to talk about here is how we can get away from that by controlling what I call the means of production, right? So the means of production for orthopedics are surgery centers, physical therapy, MRI, our ancillary services. So the more that we own and control those means of productions, the more that we can impact the value that we bring to healthcare. Now, as more of us move into a hospital-employed situation, that's sort of difficult for us to do. But there are still ways, even inside of that, to take advantage of some of the things that are coming down the pike. So these are my disclosures. None of them are relevant for my talk here today. And so really, the ASC market, when I was a fellow 30 years ago, Dick Casperi had a two-room surgery center in his office. Now that was sort of revolutionary back then. And it really was an eye-opener in how it enhanced his practice in regards to efficiency, volume, and quality, right? Now, he controlled everything about that. And so if you look at what happened in 2000, there were about 3,000 ambulatory surgery centers. Now there's about 6,000. So there's been significant growth in the last 20 years. And the percentage of procedures has gone up from about 30% to 60%. Now, SG2, which is a health care think tank, they estimate that in the next 5 to 10 years, 80% of all surgical procedures are going to be done in the ambulatory surgery setting, right? Now, that may actually underestimate how many surgeries are going to be done in the ASCs because of some of the things we're going to talk about, especially the site of service cost differential. So now there's about 6,000 centers, 23 million procedures, $35 billion in revenue. That's a big dollar figure. And the costs are, you know, the facility fees are 40% less in a surgery center than in the hospital inpatient department, right? But overall, cost can be, that's all in with surgeon fees, you know, implants, blah, blah, can be as much as 35% less than the hospital. I mean, why aren't we doing every procedure in the ASC, right? Because aren't we worried about cost, right? So the formula for surgery centers hasn't always been great, though. So the Great Recession and the Affordable Care Act sort of put ASCs on hold for a little while, right? You know, everything moved to the hospital, big, huge systems were going to be the way of the future. But guess what? Imagine that cost went up when they did that, right? So you know, in my neighborhood where there's about three or four huge hospital systems, well, the costs are pretty high. But if you look at what's going on now, certainly the trend is that surgical procedures and ASCs are climbing at a compounded annual growth rate of about 6%, right? And that's a pretty good growth rate moving forward. And that's going to be estimated for the next 10 years. It's being driven by cardiology and spine and orthopedics. So what's driving it is an aging population, more procedures. If you think about what's going on, we do about a million total joints right now. 2030, we're supposed to do 4 million or 3.5, you know, depends on who you read. Now we're going to need volume to do that. You know, we're going to absolutely need the surgery centers to do that volume. Patient choice, right? A lot of patients don't want to go to the hospital now, especially after COVID. They're afraid of the hospital, so they're moving to the ASC. Consumerism, a lot of people are being driven to ASCs by their insurance companies, et cetera, because the cost is less. And you know, why is that? It's because the site of service differential. There has been some relaxation in CON laws, but not much. This is something that's not really going to change. I wouldn't bet on the CON laws changing anytime soon. You know, your life is much better when you have an ASC and you can control your environment, right? Your turnover time is less, the people that work in the surgery center are much more amenable to your concerns. It's just a better place for you to work, and it's better for your autonomy. And obviously it can generate significant ancillary income. You know, migration of total joint and spine is really the key here. And this is from Bain Capital. This shows, you know, what's really driving the increased utilization of ASCs. Once again, spine and orthopedics. The barriers are significant, right? So you know, obviously surgery centers cost a lot of money. It can cost as much as $800 per square foot to build a surgery center right now. That's a lot of capital, right? You know, you're going to have to borrow that or you're going to have to partner to build that. The CON laws, I think, are the biggest barrier. If your state is a CON and you don't have a surgery center, very difficult to get one. You're usually going to have to get a hospital partner to get a surgery center. The local environment, the hospitals fight tooth and nail. If you're going to open one of these things, I did, and the hospital fought us so effectively that we couldn't really even do cases for a whole year after we built the surgery center because they went to the Department of Health and basically squelched us. Really amazing. You know, local reimbursement issues. In New York, for example, work comp pays really badly in the surgery center, so you have to know these things. And you know, case volume. Do you have enough volume to drive revenue, right? You need to have drive revenue to cover your costs. And you know, management, right? You know, you guys, you have a day job, right? You've got to be, you take care of patients. You need somebody to manage the surgery center, right? If you don't have somebody to manage the surgery center in your favor, then you're out of luck, right? So a lot of people look to management companies as partners, but you know, a lot of times they take a big chunk of the center, and you know, you really got to watch that. Better that you should develop some wherewithal in your own person to know how to run a surgery center if you're going to be involved in one. The opportunities are immense, though, right? So my last job working for Northwell Health, turnover time in my OR was just short of an hour for an arthroscopy, okay? So my surgery center, when I owned it, turnover time was 12 minutes. So you can't compete with that efficiency. Autonomy, right? You know, my surgery center, I controlled the environment. The employees were my employees, right? They catered to the patients and my needs. In the hospital, not so much, maybe. Patient satisfaction is higher in the surgery center, and you know, obviously the cost advantages are significant. Right now, this is the time to take advantage of what's going on in the environment. So this window is only going to be open for five to 10 years, right? As we migrate all the total joints in the spine to the surgery centers, that's going to happen, and then that's going to stop, right? So the time to do it is now, because in five years, well, you missed the opportunity. And even CMS knows this. Now, CMS might be big, and they might be slow, but they're not stupid. And they've realized that they can no longer ignore the cost benefits of the outpatient setting. They've taken total knee off of the inpatient-only list. They took total hip off the patient-only list. And in two to three years, they're going to get rid of the inpatient-only list. So there's not going to be an inpatient-only list. That means that everything can migrate to the surgery center if it's safe and effective, right? So, you know, now spines, hips, knees, shoulders, revisions are being done in the ASC setting. And this is a study out of Midwest Center for Joint Replacement. These guys probably do, the Barron brothers, they do more than anybody in the country. This is a study they did between 2011 and 2017, 20,000 outpatient total joints. You can see the breakdown there. Yeah, everybody starts with unis, and then they move on from there. But they've even done some revisions in total shoulders here. Average age, about 50. So it's a selected population. It's younger. It's healthier, right? But it's being done in the outpatient center. And you can see on this map where it's being done, right? Not being done in the Northeast so much, right? A little bit behind the times there. Mostly it's a Midwestern, Southern, and Western phenomenon. And if you look, and if you look at the literature, it's pretty clear. Discharge the same day, pretty high. Readmissions rate, pretty low. Complications are less. Patient satisfaction higher. Outcomes better. Results less. What's not to like about that, right? I mean, this is sort of the nirvana we've been looking for for the last few years, right? This is a great study. Bill Creevey out of Boston, very smart guy. Works with Hussain on the coding committee. He wrote this with Kathleen Carey. They looked at the Truven market scan database. They found that when you compare inpatient to outpatient surgery, lower complications, lower readmissions, lower payment, higher satisfaction. And if you compared the hospital outpatient department to the ASC, the ASC's even better. And the additional thing is that the ASC got higher reimbursement because they felt for two reasons. One, satisfaction was better, patient satisfaction better in the ASC setting. And two, the orthopedic surgeons who controlled these contracting issues were able to contract specifically for total joints, whereas the hospital contracts for a global package for cardiology, cancer, orthopedics, et cetera. So a more focused approach actually get the orthopedic surgeons a better income. This is our experience at Mississippi Sports Medicine. I work for U.S. Orthopedic Partners now. And we have a robust outpatient total joint program. They've done about 5,000 total joints in their outpatient surgery center. They started in 2016. This is a paper that we submitted to the Arthroplasty Journal, got accepted in the knee journal. Almost 4,000 patients, as you can see, that's the breakdown on the procedures. Average age, a little higher than the Midwest, but still lower than your average total joint. And you can see, 99% discharge same day, 99%, right? Readmissions rate, 1.9%. Patient satisfaction, 98%. Margin per case increased three times. So they took their margin per case in the ambulatory surgery center and increased it three times by putting in a bundle payment total joint program. And these are the numbers, right? So last year we did about 1,300 total joints in the ASC. About 300 of those were Medicare. And it generated $19 million in net revenue, $19 million in net revenue in a bundle payment plan, right? So this is, you're talking about value-based care. This is value-based care. This is the opportunity for orthopedic surgeons in the next five to 10 years. Everybody says, oh, it's a race to the bottom. Well guess what? We're already in a race to the bottom, and that's called CPT, right? CPT is a race to the bottom, been a race to the bottom for 30 years. This is a way for us to get away from CPT and perhaps extract as much value as we can out of the episode and not only do that, improve satisfaction, improve outcomes, decrease cost. So these are the trends to watch. A million total joints going to 3.5 or 4 million, depending on who you read. There's about equal amounts of hospitals and ASCs. There's going to be more ASCs. We're going to need this volume as procedural volume goes up. The last, this number, 310 ASCs are doing total joints. It's about 500 now, and that number's going up every day because everybody realizes the value that's inherent in this equation, right? You know, this survey was done of ACUS members last year. Only 31% of ACUS members doing outpatient total joint. Well, that's increased now too, right? So every time you talk about it, it's going to be more. And you know, as G2 figured that, well, you know, inside of five years, we're going to be doing about 52% of total joints in the ASC setting. MSMOC, we're doing 72%, right? So this is underestimation. ASCs are going to grow at a 5, 6% compounded annual growth rate. Spine and total joints are leading the way. This is a way for you to maintain your autonomy and control your practice, and it's a triple win. I mean, what's not to like? Better outcomes, better patient satisfaction. I mean, you know, isn't this the triple aim that CMS has been talking about for, you know, 10 years? So I leave you with that, and thank you very much, and enjoy the conference. And it's really wonderful to be with everyone again. Thank you, Lou.

ambulatory surgery centers

healthcare

value

surgical procedures

orthopedic surgeries