Designing for the Future of Orthopedic Care

Abstract

The expected rise in demand for orthopedic services, escalating complexity of procedures, and new demands for coordinated care will require efficiency of delivery and high-quality outcomes to ensure that reduced reimbursement will continue to cover the cost of care. It is critical for orthopedic-focused providers to think about developing a strategy for delivering holistic musculoskeletal care and the physical environment required to support this care.

Background: Orthopedic Care

The demand for orthopedic procedures continues to shift from the inpatient to outpatient care environment. Reimbursement rates continue to decline as purchasers of healthcare (payers, employers, patients) recognize these procedures can be performed in the lower cost ambulatory setting. Now, more than ever, it is critical for orthopedic-focused providers to think about both the strategy for delivering holistic musculoskeletal care and the physical environment required to support this care. The expected increasing patient volumes, escalating complexity of procedures, and new demands for coordinated care will require efficiency of delivery and high-quality outcomes to ensure that reduced reimbursement will continue to cover the cost of care.

This report evolves an earlier ERDMAN study, “Orthopedic Services in Post-COVID-19 Healthcare: What’s ahead for hospitals and orthopedists.”

Musculoskeletal care and orthopedics are well-positioned to serve as a case study, and potential success story, for migrating to a value-based care (VBC) model. Reasons include its primarily fee-for-service (FFS)-based reimbursement, and its impact to overall health spending. Musculoskeletal care and lost productivity represent an estimated five percent of all GDP spending, or a quarter of all healthcare spending.

One in two Americans have a musculoskeletal condition costing an estimated $213 billion each year in treatment and lost wages. If you include other co-morbidities that are often inextricably linked, such as diabetes and heart disease, the number is actually 5-6% of GDP up to $900 billion. (4)

However, simply moving orthopedic cases to an outpatient or ambulatory environment does not automatically mean that value-based care with improved outcomes is being delivered. The real opportunity in VBC is in treating the whole patient, which reduces the need for expensive surgery in favor of less expensive and coordinated care. While reimbursement regulation will ultimately move provider practices in this direction, those that view musculoskeletal care holistically, encompassing primary care, weight management, behavioral health, and alternatives to surgery, such as physiatry, pain management, and physical therapy, among more traditional diagnostics and procedures, may have an easier transition.

Orthopedics and Value-based Care

In the simplest terms, value-based care means that instead of relying on volume to drive payments (and thus, revenue), payments are based upon the degree of value delivered to the patient. In this instance, value is defined as Quality ÷ Cost. Quality is defined by patient-reported outcomes (PROs), hospital-reported outcomes (HROs), access, and experience. Cost, on the other hand, can be measured at the level of the encounter, but it preferentially is measured across the entire episode of care or even more broadly
by diagnosis.

Philosophically, VBC focuses more directly on population health, which marks a major change in thinking from the previous model. And it has sweeping implications for the future of orthopedic care and the built environments in which it is delivered – in some ways ushering in a whole new world.

As noted, there are various types of value-based care arrangements, ranging from simple bundled payment arrangements to managing the spend on an entire population of patients.

Bundled Payments: Surgical Episode

The Acute Care Episode (ACE) project trialed bundled payments for total hip arthroplasty (THA) and total knee arthroplasty (TKA) at three hospitals. The ACE project resulted in a 10 to 15 percent reduction in the cost per episode and a one-day reduced stay for two of the three hospitals. Using the precedents set forth by the project, the New York University (NYU) Department of Orthopedic Surgery has outlined the “Seven Pillars of Bundled Payment Success” to spearhead its adoption of bundled payments.