Case Study

How Two Orthopedics Programs Shifted Joint Replacements to ASCs

Learn how two orthopedics programs shifted joint replacements to ambulatory surgery centers (ASCs) to retain volume and compete for new patients.


The challenge

Hospital-based total joint replacements (TJRs) are increasingly at risk as payers expand ambulatory surgery center (ASC) coverage and physicians become more interested in performing cases at freestanding sites. Hospital-based orthopedics programs face rising pressure to adapt to this shift to avoid leaking these high-revenue procedures to competitor ASCs. For some hospitals, physicians’ desire to shift care out of the hospital puts physician relationships at risk as well.

The organizations

  • Virtua Health is a five-hospital health system based in southern New Jersey. It’s Joint Replacement Institute operates a hospital-physician joint venture ASC total joint replacement program.
  • The Bone and Joint Institute of Tennessee (BJIT) is a joint venture partnership between a 16-physician orthopedic practice group and Williamson Medical Center, based in Franklin, Tennessee. BJIT’s freestanding orthopedic center, which includes an ASC, opened in 2018.

The approach

Virtua and the BJIT avoided leaking joint replacements to competitor ASCs by proactively establishing their own hospital-physician ASC joint ventures. The two organizations leveraged strong stakeholder alignment and success at hospital-based same-day discharge to shift clinically eligible cases to the ASC—despite the financial challenges the freestanding model poses.

The result

Despite elective surgery cancellations due to Covid-19, Virtua and BJIT have seen rapid growth in TJR volumes since they established their ASC TJR programs. Their focus on outpatient care has strengthened quality and patient experience, enabling them to retain their volume and compete for new patients and payer relationships.


How Virtua and BJIT built their freestanding TJR programs

Virtua and BJIT each made a strategic trade-off in shifting proactively to the ASC setting: they deprioritized maximizing per-case revenue in favor of retaining volumes within the system. This shift to outpatient sites offers little room for financial or clinical error. As a result, program leaders at both organizations had to work closely with finance, physicians, and other clinical staff to enable the shift out of the hospital.

The three keys to success

Virtua Health and the Bone and Joint Institute of Tennessee each adhered to three keys to success as they implemented this strategy:

Successful same-day discharge in the ASC setting requires the same care protocols as it does in the hospital setting, but without the support of the hospital infrastructure. As a result, programs must ensure their care pathways and protocols are sound enough to complete same-day discharge in the hospital before shifting joint replacements to freestanding sites. Your hospital-based protocols will serve as the foundation for your ASC-based protocols.

Use patient selection criteria to ensure outpatient eligibility

The foundation of these protocols is appropriate patient selection criteria. Virtua Health and the Bone and Joint Institute both use physician-designed clinical triage protocols aimed at determining which patients are eligible for outpatient surgery. Virtua’s outpatient eligibility criteria necessitate meeting not just clinical requirements like healthy body mass index and lack of disqualifying comorbidities (e.g., diabetes, organ failure, etc.), but social factors as well. Because same-day surgery patients complete the bulk of their recovery at home, Virtua’s clinicians focus on selecting outpatient surgery candidates who have an available and reliable caretaker at home to support them. For patients who meet the social requirements but not the clinical ones, Virtua allows the option of undergoing “prehab,” in which patients can work to become eligible for outpatient surgery, such as by losing weight or ceasing smoking. This enables a greater percentage of Virtua’s joint replacement patients to reap the clinical and experiential benefits of outpatient surgery.

Prioritize pre-operative planning to ensure rapid ambulation

After a patient is deemed eligible for outpatient joint replacement, they partner with Virtua and BJIT’s patient navigators to begin the surgical planning process. Both organizations emphasize the importance of the pre-operative phase. Because successful same-day discharge hinges on minimizing patients’ time in the recovery room, all education and discharge planning must be completed prior to surgery, allowing the care team to focus on discharge on the day of surgery.

BJIT and Virtua’s navigators coordinate this pre-operative process by serving as the main point of contact for all patient questions and leading joint replacement classes. In these classes, navigators educate patients on what to expect on the day of surgery and when they return home, which helps speed ambulation and ensure protocol adherence after discharge. Virtua’s navigators also coordinate patients’ physical therapy for them to ensure they have an appointment scheduled for the day after surgery. This hands-on approach to care management helps prevent future complications or readmissions by ensuring patients fully adhere to the prescribed care protocols set out by the physicians.

Both health system and physician leaders need to have clear goals for the partnership. By articulating those goals explicitly, both parties understand their contribution to the venture and can prioritize decisions based on one another's goals. The result is clearer communication and greater alignment.

Hospital leaders contribute to the joint venture through financial support and operational management. Health systems’ scale enables them to foot the cost of developing the ASC facility, which is often more costly than physician groups can support independently. Hospital leaders also spearhead facility design and provide hospital support for cases that are ineligible for outpatient care or require transfer to the hospital. Physicians, for their part, control clinical design of the program. And by partnering with the health system instead of pursuing the venture independently, physicians allow hospitals to retain joint replacements within their systems.

Mutual benefit of partnership drives BJIT stakeholder alignment

BJIT’s leaders built hospital-physician alignment by recognizing and leveraging the mutual benefit of the partnership. After a decade of practicing with a major academic medical center (AMC), BJIT’s physicians sought to reestablish themselves as community leaders in Franklin, Tennessee, where the group was founded in 1979. Franklin-based Williamson Medical Center was the ideal partner—an orthopedic center of excellence and community hospital that was grappling with how to retain joint replacement cases given the outpatient shift it was seeing in its market.

The ASC partnership enabled each party to achieve its core goal. BJIT’s physicians received financial and facility design support from the hospital in building its outpatient facility and ASC, while the hospital received the physician support needed to keep joint replacement volumes within its system.

Virtua alignment rooted in successful hospital co-management

Virtua’s hospital administrators and physicians developed trust and open communication during their long-standing co-management of the hospital-based Joint Replacement Institute, a high-volume orthopedic center where Virtua’s physicians oversaw clinical operations and honed their outpatient care protocols.

This co-management model helped Virtua and its physicians achieve a 95% same-day discharge rate in their hospital outpatient department by 2017. This success at minimizing length of stay for hospital-based patients gave Virtua’s leaders the confidence they needed to partner with their physicians on ASC joint replacement. Virtua enabled the physicians to shift greater volume to the ASC by covering the capital expenses of expanding capacity at its Vantage Surgery Center, which at that time supported only lower-acuity services like arthroscopy and hand surgery.

Close alignment with anesthesia enables rapid ambulation

Trusted anesthesiologists are also needed to help ensure clinical readiness for ASC joint replacement, as early ambulation in the ASC requires waking patients more rapidly than is standard in the hospital. BJIT found this partner in Specialty Anesthesia of Tennessee, a group that traditionally performed sports medicine cases but trained itself in ASC-based joint replacement cases to prepare for the endeavor. This partnership has helped BJIT limit patients’ average time in the recovery room to just 90 minutes, minimizing the likelihood that patients require a penalty-heavy transfer to the hospital.

Because lower reimbursement is a key value proposition of ASC care for payers and consumers, providers must completely understand their costs before investing in ASC joint replacement in order to ensure profitability. Low margins in ASCs mean that programs must take advantage of physicians’ investment in the joint venture to achieve greater cost savings than is attainable in the hospital setting.

Conduct detailed cost accounting to inform payer negotiations

Before launching its program, BJIT analyzed CMS and internal data to study the episode-wide costs it would incur from performing a total knee arthroplasty (TKA) and total hip arthroplasty (THA) in the ASC. This analysis yielded a minimum price BJIT would accept from insurers, which served as a foundation for its payer negotiations.

This cost analysis balanced both financial and clinical factors. While BJIT could have lowered costs further below the price it ultimately determined, doing so would have required a sacrifice in quality, such as by using lower quality implants or anesthesia. BJIT’s balanced approach ensured that its physicians could make freestanding joint replacement financially viable while still meeting their core goal of offering high-quality, low-cost care to the Franklin community.

When BJIT approached local payers to negotiate coverage contracts, it demonstrated the savings ASC care offered them by comparing the price in the ASC to its prices in the hospital setting, which were notably higher. The detailed cost accounting, therefore, allowed BJIT to win private payer coverage that may otherwise not have been attainable.

Leverage physician stake in venture to make cost control ongoing

Virtua focused on cost containment while operating its Joint Replacement Institute in the hospital. This provided the financial footing it needed to seamlessly shift joint replacements to the ASC once it could do so from a clinical and regulatory perspective. Virtua aligned its joint replacement implant use at the system level, which helped minimize per-case costs by increasing leverage in supplier negotiations based on greater volume and scale. Trust between administrators and physicians enabled Virtua to overcome initial pushback from its physicians, many of whom preferred specific implants.

Cost containment is an ongoing effort as Virtua scales up its ASC program and is enabled by physicians’ financial investment in the joint venture. Administrators and physicians meet monthly to assess cost data, including cost per case and per surgeon, to identify opportunities for additional savings and margin growth. Being a joint venture makes achieving these savings more feasible for the partnership because physicians, too, have a financial motive to minimize cost—a luxury most hospital-based joint replacement programs do not have.




1. You'll know why joint replacement cases are shifting to outpatient care.

2. Youll understand how organizations have created hospital-physician joint ventures or freestanding centers for care in a ambulatory setting.

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