Morning everybody, it's great to be here. Thanks Kevin for the invite. I practiced for 30 years in a lot of different scenarios, mostly in a mid-size orthopedic group with ambulatory surgery center ancillaries, I did solo practice and I did hospital employment and by far the private practice mid-size, large, whatever you want with the ancillaries in a surgery center is the, I think, best way to practice orthopedic surgery now, unfortunately that model is pressured and challenged right now and Gary spoke to that, but certainly I think that if you're looking for quality control and efficiencies and production income, that is the best way to do it and the ASC is a big part of that. When I was a fellow with Dick Caspari 30 some odd years ago, they had a two-room ASC in their office and boy was that an eye-opener. I wanted to do that in whatever scenario that I practiced in and we did eventually, Kevin was a partner with the surgery center we built and obviously not all surgery centers are created the same, so we'll talk a little bit about that too. So my disclosures are in the AOS guidebook and I do work for a private equity company. So there's about 6,000 ASCs in the United States of America, interestingly enough about the same amount of hospitals in the United States and they do millions of procedures, lots of revenue and look at that compound annual growth rate of about 7% meaning that's going to double in about 10 years. Now that's why private equity is interested in orthopedic surgery, right? There's two great things going on in orthopedics right now. We have an aging population with an increase in musculoskeletal procedures and we have a site of service migration from the hospital to the ASC in regards to those procedures and that is the wave to catch right now and when you marry that with value-based care, I can show you some examples of how that can really be a winner for orthopedic surgeons and how that's going to really float the orthopedic boat for the next 10 years. Look at that growth. From 2018 to mid-20s, 16% growth overall with eventually they're saying, this is a study by who was it, I forget, I'll remember it in a second, but they're saying that by the mid-2000s, 68% of all orthopedic procedures are going to be done in the ASC. It's actually there now and it's going to go up toward north of 80. So most procedures are going to be performed in the ASC in the near term. And why? Well, you know, because we need the volume, right? I mean, we can't do all these procedures in the hospital because there's just too many of them. So, you know, we do about what, 1.2 million total needs a year now? That's going to 3.5 million in the next eight years. Patient choice, right? So, you know, patients want to go to the ASC. They don't want to go to the hospital anymore, especially after COVID, you know, Kevin brought that up. Took all of the trends in medicine and put them on steroids, right, for good or bad. So patient choice is a big one and mostly a lot of it because of consumerism, right? A lot of patients have high deductible plans, co-pays are more in the hospital, and they're actually being directed to the ASCs now by insurance companies. As a result, the writing is on the wall and some states, there's about 14 states in the United States that don't have Certificate of Need laws and you can just build an ASC if you want to. The others are, many of them are considering relaxing those CMN laws. I know for sure in Alabama, in South Carolina, there's other states also because, you know, this is a way that you can regain your autonomy. When you own and control the place where you do business, you have a lot more autonomy and obviously a lot more control of your environment. That's why doctors are very, especially orthopedic surgeons, are very frustrated with that hospital environment because you no longer control it. And of course, the insular income is not nice, it's essential. It's essential as we've lost over what, probably 60% of our procedural value over the last 30 years. The big reason to do this though is because of the site of service migration of total joints and spines to the ASC. This is the opportunity. We talked about the efficiency, autonomy, patient satisfaction is actually higher in the ASC situation and, you know, you have to be able to take care of this, take advantage of this site of service. The barriers are many, right? That's the problem here. It's nice to say, oh, let's get an ASC and let's do, you know, outpatient total joints and spines, but there's lots of barriers. The big one is the COM law. If you have a certificate of need law in your state, it's very difficult to develop these things, especially when the hospitals are very dead set against you doing this. So what happens is you put a certificate of need application in, the hospital grieves it, and they fight it, and, you know, a lot of times what you need to do is actually partner with them in some states. So it really depends on that situation. That local hospital environment and political environment is very important, and it can't be overlooked. We're trying to develop surgery centers in Alabama right now with the CON laws, and we're actually considering partnering with hospitals just because of this, right? It's almost a necessity, right? Because if you don't have them on board, they're going to fight you tooth and nail. Capital is a big barrier. You know, you're going to have to borrow this money. If you're involved in private equity, they're going to supply the capital, but these things cost a significant amount of money. You know, you have to have the right volume. You got to look at local reimbursement issues. For example, in New York, workers' compensation pays horribly, and that's a major league barrier to migration to the ASC, right? I mean, we got to the point in our ASC where we didn't do comp, and guys were taking their comp patients across state lines to Jersey because reimbursement levels were higher. So very important, and you know, management is a big deal too. So I learned the hard way that, you know, who manages your ASC really determines the success of it, and if, you know, pretty busy orthopedic surgeons don't have the time really to manage these entities. So you know, you really need to pick your partner and who's going to manage. As a result, there's very different configurations for these ASCs, right? On the procedure side, you know, you can have musculoskeletal only, or you could have multispecialty, you know, ENT, and general, and plastic, and you know, whatever. And the ownership is going to be diverse too. It can be wholly owned by the doctors, or wholly owned by the doctors and the management or management company, or with a hospital. Sometimes a management company is thrown in, but you know, I think the most, the best option is a musculoskeletal, for us, is a musculoskeletal center that's owned wholly by the docs. That really allows you to do the value-based care contracting in a way that really makes it very profitable. And this is what we're talking about, right? Instead of a piecemeal payment of, you know, the facility fee, the surgeon's fee, the anesthesiology's fee, the implants, all the stuff, well, it's one price that you set, and then you bundle that together and contract on it. And these are all the things you have to do on that, and this is not a talk about this subject, but this is an infrastructure that is difficult to set up, right? So sometimes that's why it's good to have some management capabilities when you do these things. You, orthopedic surgeon groups can do this, and are doing it now, but this is where the value is, right? When you do this, that's why you're going to get a better margin on your surgical reimbursement. And this is sort of what's been going on in one of our practices in Jackson, Mississippi, over the last eight years, since 2016. They started the program, as you can see, the blue is hospital-based total joints, and the gray is ASC-based total joints. Right now, in 2021, it was at about 61% total joints done in the ASC. Now it's 75%, as of this moment right now. So 75% of the total joints in Jackson, at this practice, are done in the ASC. That includes Medicare. They're doing, you know, 600, 700 Medicare total joints in the ASC, as part of that. And you can see the volumes. The last volume is there, about 1,800 total joints in the ASC. That's at 2,200 at this point right now. So this can be done, it can be done. The center was an eight-room center until last year, when we added on four more rooms. So now it's a 12-room center. They do about 12,000 surgeries a year in that center. So this is a focused factory, right? If you've ever read of Herzinger's book, it's, this is, you know, this is all they do. They just do orthopedics. They do it real well. We follow outcomes. And this is the spine experience, similarly, right? So now we're doing about 61% of the spines, or as of 2021, now that's about 70% of the spines in the ASC, with a volume of now about 550 spines. And that would include ACDFs, T-lifts, and laminectomies. We actually wrote this up, because we collect outcomes. Patients sustain substantial clinical benefit by three months, right? With a 3.5% orthopedic complication rate, right? And this is a real complication rate, because we're actually, the complications are all reported to us by Blue Cross Blue Shield. So we don't miss any. So we know exactly what the complication rate is. We know exactly how often it occurs. And on a monthly basis, we reconcile that with the insurance company. So they come in and they say, okay, there were these complications. And we hammer out which were actually complications from the surgery or not related. And then we get dinged if we get an infection or something like that. This is the spine experience. So far, since between 2019, 2021, about 2300, 2400 spines, a readmission rate of 0.65%, and an adverse event rate of 2%. So these can be safely done in the ASC. And if you look, this is what's going to float the boat. So these are the margins, all right? Margins per case for total joints, spines, unis, even Medicare. So if you do your contracting correct, and you go to one vendor, right? When you put out an RFP for vendors, you can extract about 70% of the implant costs and other stuff if you do one vendor. And that's one of the things that allows you to get margins like this. Compare that to the margins on the right for your usual ASC cases, right? So it could be triple. So this is what's going to save us from the never-ending decrease in reimbursement rates based on CPT coding. We have another center with a wholly-owned ASC, but it's smaller, it's only six rooms. They just started more recently. This is their first 500 cases. Once again, substantial clinical benefit. The graph on the right is their value-based care experience, which is similar to the Jackson group with about a 3.5% complication rate. So safe, effective, lucrative, what's not to like, right? The only people that don't like this are the hospitals. But it's better for patients, it's better for doctors, it's better for payers. Right now, they're only doing about 25% of their joints in the ASC, so this is something they're really working on right now, right? So think about the potential growth here for them. And this is something that's been replicated all over the United States. This is Mike Barron's group out of the Midwest, and it's between 2011, 2017, 20,000 total joints, low complication rate. So this is happening all over the United States, and this is something, I don't care whether you're in private practice, or if you're in academia, or if you're a hospital employee, this is what we need to be doing, right? Because the literature says that if you compare inpatient total joints to outpatient total joints done in the hospital outpatient department, or in ASC, well guess what? It's all better in the ASC, all better. Complication rates are less, outcomes are better, and by the way, reimbursement's higher. Reimbursement's higher in the ASC controlled by orthopedic surgeons. Now why, you know, this is Bill Creevey up in Boston, you know, when he did this work, he thought that the reason for this was that the orthopedic surgeons contracting the insurance companies were actually better able to negotiate because they had a focused negotiation for just total joints, right? The hospitals are negotiating for ENT, and pediatrics, and you know, everything, cardiology, they can't focus. This is another area that when we do focus, we win. So you know, the trends, there's about a million total, about 1.2 million total knees a year right now are going to go to 3.5 in eight years. You know, there's going to be more than 6,000 ASCs. Most practices, it's about 10% is total joint, and you know, so this is a big chunk of our business. A couple, in a survey with the ACUS members done a couple years ago, only 31% of them were doing outpatient total joints. Well this number's obviously a lot higher now, but once again, room for growth. In SG2, which is a think tank, healthcare think tank, a couple years ago, they said that half all total joints would be done in the ASC by 2026. I think we're actually going to be north of that. You know, surgery centers, compounding growth rates is growing. It's being led by spine and total joints, and that's site of service migration. It's the triple win, right? So this is why, regardless of your practice situation, you need to take advantage of this opportunity now, and we'll do questions at the end, so thank you very much, and thanks guys for inviting me. Thank you.

orthopedic surgery

ambulatory surgery center

private practice

ASC

value-based care contracting