Innovation ’19: Outpatient Joint Replacement

New knees, new hips–to go

Bundled payment is pushing providers to look for ways to control the cost of joint replacements. Is joint replacement going to become outpatient surgery?

Lola Butcher
Contributing Editor

If you want a hip or knee replaced by Stephen Zabinski, MD, a surgeon at Shore Orthopedics Associates in Somers Point, N.J., you’re in for some homework.

If you’re a smoker, that’s got to stop; there will be no surgery if you’re aren’t nicotine-free for at least six weeks. Patients with diabetes must get their HbA1c level under control. Those with sleep apnea must document they are using the CPAP machine as per doctor’s orders. Patients with a body mass index of 45 or more must take off some weight; Zabinski’s threshold is 40 if a patient has certain comorbidities. You may need to do strength and mobility training—so-called prehab—before surgery.

Stephen Zabinski, MD

Stephen Zabinski, MD, says he can get cooperative joint replacement patients home quickly.

Shore Orthopedics offers support for all the to-do items, but the surgeon is not going to let you off the hook. Patients must sign a contract agreeing to comply with the practice’s “total joint pathway,” and they must designate a “total joint companion” who will help them recover but also hold them accountable for following the rules.

In return, Zabinski promises to get them home quickly and avoid detours to a rehab facility. He operates on Medicare patients at Shore Medical Center; some get a same-day discharge while others stay 24 to 48 hours. Most patients younger than 65 never set foot in an inpatient facility.

“They have their joint replacement done at a freestanding ambulatory surgical center and go directly home the same day with some home physical therapy,” he says. “The only patients [of any age] who require a rehabilitation stay now are those who have other medical problems and, to be honest, are teetering on the edge of whether they can live independently.”

His practice is proving that joint-­replacement surgery, once considered a major ordeal, is moving toward being an outpatient procedure for many patients.

That’s news that patients and payers need to know, as joint-replacement surgeries become ever more common. By 2030, the number of total hip replacements is projected to grow by 171%, to an estimated 635,000 procedures, while the number of total knee replacements is expected to grow by 189%, to 1.28 million procedures, according to research presented at the American Academy of Orthopaedic Surgeons (AAOS) annual meeting last year.

Percent increase of planned knee and hip replacements by age group, 2010–2017

Source: Blue Cross Blue Shield Association, “Planned Hip and Knee Replacement Surgeries Are on the Rise in the U.S.,” Jan. 23, 2019

Joint-replacement patients are getting younger, which means that commercial insurers are paying for more of them. The average age of total hip replacement patients was 64.9 years in 2014, 1.4 years younger than the average age of 66.3 years in 2000. The trend was similar for total knee replacements. During the same period, the average age of the total knee replacement patient decreased by 2.1 years, from 68 years to 65.9 years, according to the AAOS presentation.

Spurred in part by payment innovation—CMS’s bundled payment program for Medicare patients, and commercial insurers’ initiatives for others—much has been learned about how to reduce complications and lower costs for joint procedures.

Still, the cost of joint replacement varies widely—suggesting that there’s a lot of improvement in managing the high-cost cases. In San Antonio, for example, a knee replacement in 2017 could have cost more than $88,000 or less than $23,000, depending on the surgeon, according to an analysis of data from Blue Cross Blue Shield Axis, the largest collection of commercial insurance claims data in the U.S. (The study was conducted by Blue Cross Blue Shield Association in partnership with HealthCore, an Anthem subsidiary.) In the Dallas area, the cost of hip replacement ranged from nearly $99,000 to less than $21,000.

Outpatient surgery is the biggest way to save, according to the Blues’ analysis, which was published in January. On average, a knee replacement performed at an outpatient center or a regular hospital without an overnight stay cost $19,000 in 2017 compared with $30,000 for inpatient surgery. Outpatient hip replacement surgery costs $22,000, compared with $31,000 for the inpatient version.

Fast Facts

Replacement cost:

Outpatient share of all procedures

Source: Blue Cross Blue Shield Association, “Planned Hip and Knee Replacement Surgeries Are on the Rise in the U.S.,” Jan. 23, 2019

Outpatient joint replacement remains very much in the minority. Only 11% of knee replacements nationally were performed as outpatient procedures in 2017, according to the Blues report, and only 8% of hip replacements.

In New Jersey, an episode-of-care payment program introduced by Horizon Blue Cross in 2010 inspired Zabinski and his partners at Shore Orthopedics to overhaul their processes and protocols so that the vast majority of their joint-replacement patients under age 65 could avoid inpatient surgery and rehab. Participating surgeons who meet or beat quality, cost, and patient-satisfaction benchmarks receive shared-savings payments from Horizon on top of their fee-for-service payments.

Horizon shares data about each patient’s entire episode of care with the surgeons, allowing them to see the variations in care and costs. Among other things, this allows them to see how expensive inpatient rehabilitation is.

“I think that was eye opening for the specialists to realize that that’s where a lot of the additional, and arguably unnecessary, expense took place,” says Allen Karp, Horizon’s executive vice president for Healthcare and Transformation Management. In 2017, the total cost of a knee replacement for a Horizon member whose surgeon was in the episode-of-care program was 21% lower than a surgeon paid in the usual fee-for-service way. The total cost of a hip replacement was 30% lower.