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Part 2 of 2. Assessing Surgical Demand in Under- and Over-Bedded Metropolitan Markets

In Part 1 of this series, we examined market-level hospital bed availability in major metropolitan CBSAs, a key factor in determining access to healthcare and capacity for care delivery.¹ Across the country, markets face varying degrees of hospital bed oversupply or undersupply, which can impact care quality and costs. To accurately assess whether a market is over-bedded or under-bedded, it is essential to evaluate bed capacity relative to localized demand for healthcare services. Comparing actual and projected demand against bed supply helps contextualize how well hospital capacity aligns with population needs. Therefore, in Part 2 of this series, we examine how surgical volumes – specifically total hip and knee replacements – relate to hospital bed ratios in both over- and under-bedded markets, focusing on patients ages 65 and older.

Background

Our findings from Part 1 highlighted potential imbalances in hospital bed availability across CBSAs. While most states and CBSAs have between a rate of 2.0 and 3.2 beds per 1,000 population, many regions have an oversupply and others an undersupply relative to the national rate of 2.35 beds. In larger markets with populations over 1M, bed rates range from 1.3 (Raleigh-Cary, NC) to 4.1 (Birmingham, AL), with 52.2% considered under-bedded (Figure 1). Demographic differences between markets with an oversupply and undersupply of hospital beds suggest likely variations in local surgical demand.

Total hip and knee replacements are among the most common surgical procedures, particularly among older adults, improving mobility, reducing pain and enhancing quality of life. More than 1.3M total hip and/or knee replacements are performed annually in the U.S., with an average patient age of 67.2 and 65.7 for total knee replacement and for total hip replacement, respectively.^2,3 Advancements in surgical techniques and postoperative care have fostered the gradual shift to outpatient sites, with 12.2% of total hip and knee replacements performed in outpatient settings in 2022.⁴

Because the vast majority of total hip and knee replacements are still performed in inpatient settings, hospital bed availability is a key consideration. Markets with an oversupply of beds can more easily meet demand but must also manage excess capacity. Conversely, under-bedded markets may face challenges in meeting demand, potentially leading to delays in care or patients seeking treatment in other markets. Given these dynamics, this study examines how demand for both inpatient and outpatient total hip and knee replacements aligns with bed availability in over- and under-bedded markets, focusing on the 65 and older population.

Analytic Approach

We leveraged our national all-payer claims database and Provider Directory to analyze historical outpatient volume of total hip and knee replacements from 2018 to 2023 and forecasted inpatient demand for total hip and knee replacements through 2028 for patients ages 65 and older, by CBSA. We examined select CBSAs with over 1M population that have an oversupply or undersupply of hospital beds relative to the national rate of 2.35 per 1,000 population.

Findings

Regarding outpatient procedures, the volume of total hip and knee replacements increased in all analyzed CBSAs, regardless of bed supply. In oversupplied markets, the five-year compound annual growth rate (CAGR) between 2018 and 2023 ranged from 12.2% in Tulsa, OK to 51.4% in Boston-Cambridge-Newton, MA-NH, with a median CAGR of 31.7% (Figure 2). In undersupplied markets, the five-year CAGR between 2018 and 2023 ranged from 21.4% in Providence-Warwick, RI-MA to 75.0% in Virginia Beach-Chesapeake-Norfolk, VA, with a median CAGR of 40.0%. The shift to outpatient was comparatively faster in markets with an undersupply of hospital beds, potentially reflecting the low capacity of inpatient care. How much of the larger magnitude shift in undersupplied markets was driven by a dearth in inpatient capacity vs. patient and provider preferences for outpatient care?

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