by Tom Robertson
Executive Director, Vizient Research Institute

A recent article in Modern Healthcare reported on the enthusiasm over outpatient joint replacement surgery for younger and healthier patients. The arguments in favor of the shift for a subset of carefully selected patients are compelling. Quicker recoveries, faster return to normal activities, and reduced exposure to infections and other risks associated with hospitalization make a strong case for the change of venue.

CMS has yet to approve outpatient joint replacements for Medicare patients, which has triggered considerable discussion, much of it originating with orthopedic surgeons, some of whom have ownership interests in outpatient surgery centers. The benefits to younger, healthier patients and the potential to reduce costs to the Medicare program make the enthusiasm understandable. At the same time, however, it’s important not to lose sight of the economic implications for the older, less healthy surgical patients who will remain in the inpatient setting.

The ongoing dialogue around joint replacement surgery makes me think about a walk through an orchard.

A popular summer pastime in the upper Midwest is to visit an orchard to pick your own cherries. Anyone who has ever carried a wooden basket and a step ladder into a cherry orchard knows that the lowest hanging fruit is the easiest to pick. Left to our own devices, we would move from tree to tree, picking cherries within arm’s reach until every tree in the orchard was picked clean toward its bottom but full of cherries toward its top.

Commercial growers harvest hard-to-reach cherries using sophisticated hydraulic equipment that safely shakes the tree without harming it. Without the expensive equipment and the scale of the commercial operation, most of the cherries on the market today would have gone unpicked.

It’s interesting to note that the price of the cherries when sold at market does not differentiate between those that grew on lower branches, where harvesting by hand was an option, from those that grew on higher branches, where the equipment was needed. A single market price reflects the average cost of harvesting all of the cherries.

Amid the understandable enthusiasm for lower-cost outpatient joint replacements, it will be important for policymakers to remember the patients for whom the outpatient setting is not a viable option. Historic payment rates reflect average costs. When younger, healthier Medicare patients move to the outpatient setting, the cases left behind will have costs much higher than the previous weighted average.

It’s not as simple as comparing the lower outpatient costs to the previous inpatient expenditures and crediting the difference as savings. Some of what looks like savings will be needed to cover the costs of the remaining inpatient cases, which will no longer be subsidized by the patients who were carefully selected for outpatient procedures.

There’s nothing wrong with picking cherries by hand, as long as we have a plan for the tops of the trees.

About the author and the Vizient Research Institute™. As executive director of the Vizient Research Institute, Tom Robertson and his team have conducted strategic research on clinical enterprise challenges for 20 years. The groundbreaking work at the Vizient Research Institute drives exceptional member value using a systematic, integrated approach. The investigations quickly uncover practical, tested results that lead to measurable improvement in clinical and economic performance.

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Published: August 23, 2016