The ASC Shift: The hidden economics

The rise of ambulatory surgery centers (ASCs) marks a shift in how surgical care is delivered across the U.S. Amid soaring healthcare costs, tighter reimbursement and advancing surgical technology, health systems are rethinking where and how procedures are done. Many are moving complex surgeries like total joint replacement and spine out of hospitals and into ambulatory settings. Once limited in scope, ASCs are becoming key players in strategically important service lines like orthopedics.

Market growth and industry momentum

ASCs are expanding at a 6.9 % compound annual growth rate, with spending projected to rise by $22 billion over the next seven years. The growth is fueled by payer pressure, regulatory change, rising consumer demand, entrepreneurial momentum and a growing desire among surgeons to take ownership in the facilities where they operate.

Meanwhile, U.S. healthcare spending has surged to 17.6% of GDP, with per capita costs topping $12,500, far above other developed countries like Switzerland and Germany. Payers are responding by cutting reimbursement across all sites of care. ASCs have stepped into this gap, offering a lower-cost, more efficient alternative.

But ASC success depends on systems’ strategic planning as well as blending clinical excellence with tight operations for financial sustainability.

Surgery is shifting, but margin is not guaranteed

This migration of surgical procedures to ASCs often is not optional for systems — it’s a necessity. Margins in ASCs are less predictable, with higher variability in costs. But hospital outpatient departments (HOPDs) aren’t risk-free either. As more procedures become ASC-eligible, HOPDs are losing volume to competitors. At the same time, site neutrality policies are threatening the reimbursement edge HOPD's once held.

The shift to ASCs is not about chasing guaranteed returns, it is about building a cost base that makes margin possible in a lower-reimbursed and more competitive environment. Freestanding ASCs are generally reimbursed at lower rates than HOPDs or inpatient facilities. In some procedures, Medicare patients may even face higher out-of-pocket costs at ASCs due to copay caps that do not apply. Still, systems that wait too long to build their ASC strategy are at risk of losing both market share and revenue.

Cost-saving illusion meets operational reality

As part of their strategy, systems need to be aware of the unique operational hurdles that challenge both efficiency and profitability for ASCs. Complex procedures like total joints and spine cases require multiple sterilized trays, robotics and specialized equipment, along with larger operating rooms and recovery spaces — yet many ASCs lack the physical infrastructure to support this.

Patients require robust postoperative care, including pain management, physical therapy and close monitoring for complications. Accreditation and infection control demand ongoing investments, while the low daily case volume for complex procedures can hurt profitability unless balanced with simpler cases.

Recruiting and retaining skilled OR teams, especially in high-demand specialties like spine, remains difficult. Additionally, patient education and compliance with care plans are essential to outcomes, while payer policies, particularly for Medicare, often increase patient cost-sharing and add to reimbursement complexity.

To succeed in this environment, ASCs must rigorously manage every variable — from instrument inventory and staffing to case mix and operating room time — with operational precision.

Supporting ASCs through supply chain innovation

As more complex cases migrate to lower-cost settings like ASCs, innovative sourcing tactics can be critical to address costs.

Aggregated pricing — such as pooling orthopedic implant spend across multiple ASCs — enables systems to leverage volume-based discounts and reduce cost variation. Every ASC benefits from the same pricing, whether they spend $100,000 or $2 million.

And commitment-based contracting (ASCs entering into agreements across multiple orthopedic implant categories) can ensure risk sharing — promoting mutual accountability between providers and suppliers. As these commitments are upheld, suppliers realize value and are willing to offer risk-based pricing discounts.

Vendors also benefit. Risk-based contracts help stabilize volume, reduce churn and open access to new customer channels. In today’s market, deep supplier partnership and compliance, not just pricing, are the new differentiators for ASCs.

The bottom line: Shifting sites without shifting strategy is a mistake

ASCs are not a magic wand for health systems. While they offer savings to payers, the economics are fragile for providers. Healthy margins require lean operations, smart sourcing and trusted partnerships.

There’s a growing demand for more complex procedures in outpatient settings, but ASCs need to strategically position themselves to meet this demand in an operationally and financially sustainable way.

With advances in surgical technology and care coordination, ASCs are ready to deliver on the promise of value-based care. The challenge for health systems isn’t just to shift where care is delivered, but to rethink how surgical care is structured, managed and financed for long-term performance.