The site-neutral era is here. Is your ambulatory strategy ready?

Ambulatory expansion continues to be a central pillar of many health system growth strategies due to significant outpatient revenue growth, with a 20% increase in OP surgical volumes projected over the next decade, and more than 80% of consumer health interactions occurring outside the hospital.

For many organizations, ambulatory services still represent a significant market share opportunity and a critical growth engine. But the economic conditions behind those strategies are beginning to shift.

Across boardrooms nationwide, health system leaders are increasingly asking: What happens to ambulatory growth strategies when payment rates align across settings of care?

The economic forces behind site neutrality

Policymakers and payers are intensifying site neutrality efforts to reduce the cost of care by narrowing payment differences between care settings.

Today, services that can be performed in multiple care settings can command different reimbursement rates. For example, Medicare fee-for-service reimbursement for a cervical spinal fusion ranges from approximately $16,895 in the inpatient setting to $12,867 in a hospital outpatient department (HOPD) to $9,069 in an ambulatory surgery center (ASC).

At the same time, advances in clinical technology, anesthesia, and care pathways are expanding the range of procedures that can safely move outside the hospital. Nearly 30% of procedures nationwide now occur in ASCs, and that share continues to grow.

Meanwhile, financial pressures are intensifying across the healthcare ecosystem. Payers are managing rising utilization while providers face persistent margin constraints. Together, these forces are accelerating the need to reduce cost structure to lower the cost of care delivery.

Even without sweeping federal legislation, site neutrality is already reshaping payer contracting strategies, utilization management policies, and network design. Commercial insurers are increasingly steering care to lower cost settings.

In addition to competing for outpatient volume, health systems are adapting to an environment that increasingly rewards care delivered in the lowest-cost setting.

To capitalize on the expansive growth in ambulatory services, health systems need to capture that growth while remaining competitive in a more cost-sensitive site-of-care environment.

Where is your ambulatory portfolio most exposed?

Health systems should begin by conducting a structured assessment of their current ambulatory services to understand the magnitude of risks and opportunities.

In many ways, these services now resemble an investment portfolio. Some will continue to generate stable returns in hospital outpatient settings, while others may perform better when delivered in lower-cost environments such as ASCs or physician offices.

The challenge for leaders is to understand the circumstances in which services are appropriate to provide in each setting as reimbursement models evolve.

Key strategic questions to ask include:

• Which service lines are most exposed to reimbursement compression under site-neutral payment models?
• Which services could appropriately migrate to alternative ambulatory settings such as ASCs or physician offices?
• Which services should remain within HOPDs due to patient complexity, technology requirements, or clinical integration needs?
• How do payer dynamics, physician alignment, and local market conditions influence site-of-care strategy?
• Does our cost structure reflect the environment in which care is delivered?
• Are existing facilities configured to support potential shifts in where care is delivered, or will capital investment be required?

Answering these questions requires a combination of service line analytics, volume projections, and financial modeling. Leaders must evaluate not only reimbursement differences across sites, but also patient safety and the cost structures associated with delivering care in each environment.

Importantly, the “right” ambulatory portfolio will vary significantly by market. In large, dense population centers, health systems may have opportunities to support a broad mix of ambulatory sites and specialized services. In smaller or more rural markets, however, access constraints, workforce availability, and capital limitations may require more focused, integrated models. Regardless, operations within the ambulatory environment must reflect strategic goals, patient expectations and financial realities.

As a result, ambulatory strategies must be grounded in local market realities—not a one-size-fits-all blueprint.

The goal is simple but critical: Understand where the ambulatory portfolio faces risk—and where strategic repositioning could create long-term advantages.

Redesigning for a multi-site future

Once organizations understand the risks and opportunities within their ambulatory portfolios, the next step is to translate those insights into a clear strategy for care delivery across sites.

Some services may be better suited for migration into lower-cost ambulatory environments such as ASCs. Others may remain appropriately located within HOPDs due to clinical complexity or care coordination needs.

Health systems may also explore structural approaches that expand ambulatory capacity while improving cost performance. These may include new governance and operating models, partnerships, or revised physician alignment models that support care delivery across multiple settings.

The optimal configuration of sites and services will differ based on local demand and patient demographics, competitive dynamics and geographic considerations. What works in highly competitive urban markets may not be feasible—or necessary—in rural settings, where ensuring access and care continuity may take precedence over site-of-care optimization.

Importantly, decisions about where services are delivered must align with broader enterprise priorities such as capital planning, physician workforce strategy, and payer contracting.

When approached strategically, site-of-care planning becomes more than a response to reimbursement pressure. It becomes an opportunity to redesign care delivery in ways that improve access, efficiency, and long-term financial sustainability.

Operational excellence is required—differentiation comes from access and experience

Even the most thoughtful ambulatory strategy will fall short without strong operational execution. In a site-neutral environment, efficient, well-coordinated ambulatory operations are no longer a source of differentiation—they are table stakes.

As reimbursement differences between care settings narrow, the margin advantages many health systems once relied on will erode. Health systems will need to ensure clinical workflows are standardized, staffing models can flex with demand, and facilities operate at consistently high utilization.

However, operational performance alone will not determine long-term success. The organizations that thrive are those that pair strong operational performance with superior access, seamless navigation, and a differentiated consumer experience.

As cost structures converge across sites of care, patient choice and access will increasingly shape where care is delivered. Health systems that make it easy for patients to enter, navigate, and stay within their networks—while delivering a consistent, high-quality experience—will be better positioned to retain volume and grow market share.

In a site-neutral environment, ambulatory strategy is not just about where or how efficiently care is delivered. Organizations will also need to connect access, experience and operations into a cohesive system of care.