Total joints, made viable in an ASC.

The problem

The surgery center opened in 2011 as an independent single-specialty orthopedic ASC in Georgia — two operating rooms, fifteen surgeons, strong clinical leadership. The early case mix was solid: shoulder, hand, arthroscopic knee, foot and ankle, pain procedures.

As the center matured, the team wanted to expand into total joint replacements and spine — procedures that can be performed safely in an ASC at roughly half the cost of a hospital setting, and that were becoming increasingly viable as clinical practice evolved. They spent nearly a year building the infrastructure to do it right: a multidisciplinary task force covering finance, clinical, utilization management, anesthesiology, physical therapy, and home health. Equipment. Staffing. Care delivery protocols.

Six to eight months in, they hit a wall. They were operationally ready. They weren't contractually ready. They were largely out-of-network with health plans, and the contracts they did have didn't include implant provisions — which made total joint cases financially unworkable. Without the right reimbursement structure, the procedures couldn't happen at scale regardless of how well the OR was equipped.

What Kearny Street did

Kearny Street worked with the surgery center to build the financial case from the ground up. That meant a full cost analysis of existing services and reimbursement, plus a projected cost model for the new implant procedures they hadn't performed yet — including total hip, knee, and shoulder replacements.

The key variable in making total joints viable was the implant cost — a large, unpredictable cash outlay that most ASCs aren't positioned to absorb upfront. Working alongside an implant purchasing group with an established reimbursement schedule with the payer, Kearny Street was able to remove that variable from the cost model. The purchasing group handled the financial responsibility for implant replenishment; the surgery center didn't have to outlay the cash for each case.

With that piece in place, Kearny Street had a defensible number — what the surgery center needed to cover costs at a fair margin, and what the payer was being asked to save versus the hospital outpatient setting. The parties were brought to the table. The negotiation had a structure both sides could agree to.

“We were able to bring the two of them together and put together a mutually beneficial program. We knew that we could offer a big savings to the payer from what they were paying, and yet still have a reasonable rate for the surgery center to cover their costs. We also believe the quality is better within the surgery center because of the more focused approach versus the mass approach at the hospital outpatient setting.”

The result

The surgery center secured coverage and reimbursement from the payer for total joint procedures. Unicompartmental knee cases began immediately. Total knee replacements followed. Spine negotiations — led by the center's clinical program — began in parallel, with three cases already scheduled.

Financially: a conservative projection of 20-plus new high-acuity cases per year, with a revenue and margin increase of $2,500 to $3,500 per case — without the upfront cash outlay for implants. The model improved the surgery center's case mix, their profitability, and their trajectory toward Center of Excellence designation with payer partners.

For the payer, the outcome was direct: meaningful savings on surgical costs versus the hospital outpatient setting, better patient outcomes, and a model replicable across other markets.