Ambulatory Surgery Centers to Perform >70% of US Surgeries by 2025
In 2018 we wrote here that outpatient surgeries would be the way of the future. Overall process efficiency, cost savings, simplicity of operations and sterile-packed, surgery-ready instruments and implants would be the key to market adoption and scalability. It has come true. Both medical product OEMs and end customers (surgeons, OR nurses and their teams) understand the 30-year legacy of high cost of sales, inefficient inventory management and spiraling logistics costs, which have hobbled OEM implant makers and are passed down to hospitals and ASCs, are no longer sustainable.
During the Covid period, OEM implant companies focused on their P&L statements and saw and addressed the high SG&A charges as percentage of sales and balance sheets carrying depreciating instrument sets (they are never sold with 90+% being loaners or on consignment), which underscored the high cost of orthopedic and spine implant products and downstream fulfillment costs, making the US the world's most expensive per capita healthcare system.
Paying between $200 & $400 per surgery for shipping costs alone to ferry in & out existing reusable instrument cases and trays is prohibitive, eating deeply into profit margins. This waste coupled with growing reprocessing costs and carbon footprint woes for both the OEM and enduser to handle, clean and re-sterilize these instruments; the chronic spare, repair and re-calibration costs; the risk of surgical site infection, which can add over $28,000 in additional costs per case, and in fact only 30% of the instruments prepared for a case are ever used, make the traditional model archaic. Add to this the delayed procedures or missed surgeries and lost implant sales created by waiting for reusable instrument cases and trays to arrive on site or be delivered from SPD.
Active and dormant pain points are being addressed, and a viable and scalable path forward is achieved, in part, with adoption of surgery-ready, single-procedure instrument sets that are optimized for the procedure, tailored to the implant and clinically robust while providing measurable economic value. These instrument sets, paired with sterile, surgery-ready implants, are ideally used for high-volume and relatively lower complexity trauma, extremity, spine, joint recon and other surgeries, including interventional pain procedures like SIJ treatment, spinous process, facet fusion, and more, and offer excellent alternatives to traditional case/tray models while reducing O&M costs and infection risk and improving patient safety. This approach also meets stringent MDR requirements.
Financial models show implant makers can save over $1,000 per procedure and hospitals and ASCs over $800 per surgery by moving to sterile-packed implants and single-use instruments. For ortho implant makers that's a potential savings of over $11 billion per year to their bottom lines. And hospital and ASCs could save another $13.2 billion per year.Combined that's about 1% of the total $2.7 trillion cost of US healthcare every year.
This year (2025) 70% of all eligible surgical procedures will be conducted in ambulatory surgical centers (ASCs). That suggests over 2 million surgeries per year will be shifting from hospitals to ASCs. Over 18% of outpatient procedures will be for orthopedics, which are among the most profitable cases today. A 2024 Research and Markets report indicates the US ambulatory surgery center (ASC) market is valued at $45.6 billion in 2024. The market is projected to grow 21% to $55.3 billion by 2029 as more procedures become minimally invasive and care shifts from the inpatient to outpatient setting.
Outpatient surgical volumes are projected to reach 109.6million cases by 2033, an 18% increase from 2023 levels. In the second quarter of 2024, there were over 6,300 Medicare-certified ASCs in the U.S. Some market highlights:
Medical device OEMs are keen to win a large portion of that 70+% of surgeries and provide value to ASC surgeons, OR teams and patients, and sell more implants. OEMs make their sales and profits selling implants and they are best coupled with a pristine sterile-packed, surgery-ready instrument set. Surgeons want efficiency and rapid OR turnover in the ASC setting. To gain maximum market share, build implant, company brands, and sell more implants, successful OEMs can meet this market demand by bundling the sterile-packed instrument/implant and sell under one reimbursable SKU or sell the stand-alone instrument set turning a reusable instrument cost center to a profit center.
Successful OEMs will avoid the temptation to market and price the single-use instrument set as a very high-cost rescue or premium kit, which will stifle sales and prove a tepid attempt at product differentiation. Selling on value is key, and marketing teams must pivot to present the cost savings (fixed and variable), improved case flow and operating efficiencies that ASCs realize from adoption of single-use solutions. Small- and medium-sized implant OEMs (typically technology innovators and early adopters) are, in particular, positioned to exploit the market discontinuity offered by sterile-packed instruments and implants. It allows them to grow sales and take share in the ASC from larger firms, given their agility and adaptive cultures including use of regional distributors and small yet focused direct sales rep channels providing concierge customer support.
However, the large mainstream US and global orthopedic medical product and device distributors have taken notice and are embracing single use over the past two years to drive out cost of sales per transaction with new technology, delivery systems and ASC solutions. A handful of tier 1implant firms are spending big to accelerate development and introduction of novel single use solutions. They are poised to quickly penetrate and win across the ASC market. Generic implant makers deploying sterile-pack solutions are also staged to gain sales and share in US, EU the BRICs and emerging markets.
There are also some exciting sterile one-way precision instrument solutions rolling out with advanced AI-based surgery, imaging, and robotics systems in the OR.
This “surgery in a box” delivery model cuts OEM logistics costs and overall life cycle and procedural cost by $1,000 per case. Implant OEMs can reduce the overall costs of sales per transaction, never miss a sale because cases and trays are not available and they will improve ASCOR efficiency and turnover rates and reduce the risk of surgical site infection. Moreover, the ASC will save over $750 for a distal radius, fibula, clavicle or similar fracture repair case and over $1,200 for more complex cervical spine (one- & two-level fusion) and sacral joint type degenerative repair cases.
Technology and robust single-procedure and surgery-ready instruments and products exist today that can be employed by forward-thinking OEMs and ASCs as viable alternatives to traditional business models, reusable instruments and fulfillment methods. The savings and risk reduction to both implant OEM and end user are compelling as is the potential to provide sustained benefits and measurable economic value to a fast-growing ASC market segment.
James Schultz
Vice President, Sales & Marketing at ECA Medical Instruments
About the Author: Jim is a medical device executive with many years’ experience in medical instruments, biotech and Medtech product design and development, including leading development of the industry's first telemedicine system for radiology.
