As CMS continues to move more procedures into the outpatient setting, ASC leaders say growth opportunities are expanding but not without risk.
The “shiny new thing” for many ASCs today often means newly approved outpatient procedures, higher-acuity cases or specialty expansions that promise growth but require significant upfront investment. While those opportunities can be attractive, leaders caution that not every new procedure or service line will translate into sustainable margins.
One of the biggest forces driving ASC growth is CMS’s ongoing expansion of procedures approved for outpatient settings, said Tara Good-Young, CEO of PDI Surgery Center in Windsor, Calif. But that shift is also increasing pricing pressure and competition at the same time ASCs face higher labor, supply and capital costs.
“There’s going to be the expectation of downward pressure on pricing,” Ms. Good-Young said during an interview with the “Becker’s Healthcare Podcast.” “Just because there is a shiny new thing for you to possibly be able to do in the ASC doesn’t necessarily mean that it’ll be profitable.”
ASC leaders must be disciplined about payer negotiations, market saturation and margin analysis before adding new service lines. New procedures often come with front-loaded costs, including staff training, new equipment, payer authorization complexity and ramp-up periods that can strain margins.
“If it’s already oversaturated in a shouldering market to you, you may not have room for market share, and it may quickly be a race to the bottom on price,” Ms. Good-Young said.
That focus on financial discipline is echoed by Geri Eaves, BSN, RN, CASC, CNOR, CEO and administrator of the Bone and Joint Institute of Tennessee Surgery Center. As ASCs take on more complex cases, she said leaders must be clear-eyed about profitability.
“ASC leaders should prepare. They should look at their road map ahead and look at your margins, analyze your case mix, proper profitability margins,” Ms. Eaves said. “Make sure you’re looking at all of that because it’s going to be huge with some of the forces that we’re dealing with.”
While demand continues to shift outpatient, Jeffrey Flynn, COO of Gramercy Surgery Center and president of the New York State Association of Ambulatory Surgery Centers, said the broader cost crisis in healthcare is accelerating payer and employer pressure on ASCs.
“We have an unsustainable healthcare cost climate in this country,” Mr. Flynn said. “As insurers, payers, and employers are actually now demanding that they want to see with technology in healthcare, the higher acuity cases are going into the lower cost settings.”
But Andrew Lovewell, CEO of Columbia (Mo.) Orthopedic Group, said ASCs must be operationally ready before absorbing that volume. Without the right staffing models, scheduling discipline and throughput efficiency, additional cases can erode margins rather than improve them.
“As an ASC, you have to be ready for expansion. Do you have the staff in place? Or is your block schedule optimized where you can produce at that level?” he said. “Let’s just get the basics right so we can deliver.”
ASC growth is no longer about being first to offer the newest procedure. Instead, margin protection increasingly depends on disciplined expansion, clear visibility into costs and readiness across staffing and operations. In an environment of pricing pressure and rising complexity, chasing the wrong opportunity can be more damaging than standing still.
