From anesthesia stipends to implant sticker shock, ASC leaders say the math between what it costs to run cases and what payers reimburse is breaking down.
Twenty-two ASC leaders joined Becker’s to discuss which expenses are most out of sync with reimbursements. The most common pressure points were labor and anesthesia coverage — two costs that have surged while Medicare and commercial updates lag. Others pointed to high-priced implants and supplies that hit cash flow immediately but are often bundled, delayed or denied on the back end. Across markets, the expense curve has shifted, but reimbursement models haven’t moved with it.
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Editor’s note: Responses have been lightly edited for clarity and length.
Question: Which expense is most out of sync with reimbursement today?
Vijay Bachani. President and Chief Growth Officer of New York Bariatric Group (Roslyn Heights, N.Y.): Anesthesia reimbursement as it relates to government payers (especially Medicaid) is most out of sync. Anesthesiologists are in high demand and unless your center has a healthy amount of commercial cases, you will either end up losing money if you hire your own anesthesiologists or you may have to provide a subsidy if you outsource it.
Peter Bravos, MD. Chief Medical Officer of Surgery Center Division at Sutter Health (Sacramento, Calif.): Implants and surgical supplies are the most consistently misaligned ASC expense. They often require an immediate, high-cost purchase, while payer reimbursement is delayed and frequently reduced, bundled or denied. Costs also vary by patient and surgeon, coverage rules are inconsistent and documentation issues may further reduce final payment. Additionally, vendor models such as consignment and rep-managed inventory introduce additional timing gaps to reimbursement. While other expenses, including anesthesia coverage, specialty drugs and temporary staffing, present their own challenges and can fluctuate relative to payment, none combine the same level of upfront cost, cash exposure and reimbursement uncertainty as implants and supplies.
Charlene Cioe, RN, MSN. Chief Nursing Officer of Summit Center for Surgery (Oakbrook Terrace, Ill.): In most ASCs today, the expense that is most out of sync with reimbursement is labor cost — especially licensed nursing staff, anesthesia staff and surgical tech staffing. This gap has widened significantly since COVID and has not been matched by CMS or commercial payer rate increases.
Anesthesia contracts are often the single line item that shocks leadership, but nursing labor is the continuous daily bleed that erodes margins.
Why labor is the biggest mismatch:
1. Reimbursement is procedure-based and relatively flat.
- ASC payment is tied to CPT/APC groupings that increase only marginally each year.
- CMS updates have been modest and do not reflect real-time wage inflation.
- Commercial payers often benchmark off Medicare ASC rates.
2. Labor costs have risen 25%–60% in many markets.
- RN, scrub tech and anesthesia hourly rates have surged.
- Reliance on travelers, agency staff and overtime is common.
- Required staffing ratios and competencies haven’t changed, but the cost to meet them has.
3. Case time reimbursement doesn’t account for staffing intensity.
- A 90-minute case reimburses the same regardless of how many staff are required.
- Longer turnovers, SDOH-related delays and higher acuity patients increase staff time but not payment.
Deena Edwards, RN. Administrator of The Surgery Center of Southwest Ohio (Moraine): Anesthesia expenses. Anesthesia continues to get lower reimbursements but costs more and more, which puts the burden on the ASCs to cover those losses with huge stipends.
Jeffrey Flynn. Administrator and COO of Gramercy Surgery Center (New York City): Without a doubt, the most out-of-sync expense to reimbursement is anesthesia. Specifically, the government programs of Medicare and Medicaid. It is nearly impossible to support an anesthesiologist on these payments and has forced us through the past three years to supplement with the facility fee. This stands as the number one danger to ASCs that we face today.
Megan Friedman, DO. Chair and Medical Director, Pacific Coast Anesthesia (Los Angeles): Expense and reimbursement are most out of sync in anesthesia staffing. Anesthesia coverage is still reimbursed as if it can be turned on and off by the case, but the expense structure no longer works that way. Anesthesiologists must be physically present, immediately deployable, and staffed for variability, delays, add-ons, and rising acuity, regardless of whether a room is actively generating billable minutes.
Reimbursement continues to reflect fee-for-service assumptions, while the real expense is driven by fixed readiness costs, predictable hours and workforce expectations that have permanently shifted. That disconnect is now one of the largest and least acknowledged drivers of financial strain for hospitals and ASCs alike.
Carmel Galster, RN. Administrator of Wausau (Wis.) Surgery Center: We provide surgical care for orthopedic and ENT procedures. Implants continue to be where we see high expenses vs. what we are reimbursed. For instance, the INSPIRE procedure requires a unique implant that costs more than the entire reimbursement allowed by Medicare in my region.
Sean Gipson. CEO and Division President of ASCs for Remedy Surgery Centers (Hurst, Texas): In my opinion, labor has become the expense that is most out of sync with reimbursement in today’s ASC market. While ASCs continue to deliver efficient, high-quality surgical care, staffing costs are rising at a pace that far exceeds payment updates from both Medicare and commercial payers.
In my experience, labor is the largest operating expense for most ASCs, and recent workforce pressures have only intensified the challenge. Wages for nurses, surgical technologists and administrative staff continue to climb amid persistent shortages and increased competition from hospital systems. Centers are absorbing higher costs related to overtime, contract labor, recruitment, retention incentives and benefits.
Anesthesia staffing specifically represents one of the most significant pressure points. Many ASCs are paying stipends or entering higher-cost coverage arrangements to maintain reliable anesthesia services. However, anesthesia reimbursement has remained largely stagnant, forcing centers to subsidize coverage simply to keep operating rooms open.
Unlike other cost categories, labor is not easily reduced or deferred. Regulatory requirements, accreditation standards, and patient safety expectations demand consistent, highly-qualified staffing regardless of reimbursement levels. Yet payment updates remain incremental and often tied to inflation indices that fail to reflect current healthcare labor market realities.
As a result, ASCs face a growing structural imbalance: labor costs continue to rise while reimbursement lags. Until payment models more accurately account for our true cost of staffing, labor will remain the most significant financial disconnect for ASCs across the nation.
Monte Goldstein, MD. Chief Medical Officer of Virtua ASC Joint Ventures (Marlton, N.J.): The expense related to incorporating new technologies into the ASC space is not accounted for when reimbursement is considered and as CMS and commercial payers continue to encourage and in some instances even demand certain procedures be performed in an ASC. One example is soft tissue robotics. As younger surgeons across multiple service lines enter the ASC environment, for many surgeries, it is not only their preferred method, but the only method they utilize and that they have been trained to use during residency and fellowship. The start-up and ongoing costs to implement these technologies are astronomical for most ASCs without adding any additional revenue from payers. This doesn’t even take into account the physical plant adjustments that often need to be made as well as decreased turnover time that comes along with this new technology.
Patrick Haley. Principal of Physicians Surgery Centers (Woodland Hills, Calif.): Anesthesia is absolutely the biggest line item expense that has changed in recent times. There has never been consideration for anesthesia expense in payer reimbursement to a stand-alone ASC as it has historically been a non-issue, but the market has shifted. The required subsidies are absolutely the biggest gap between reimbursement and cost. It is a simple supply/demand problem that has been pushed upon a complex network of reimbursement methodologies and regulatory requirements. There are other cost/reimbursement gaps with things like robotics, medications, and expensive new implants, but facilities are more accustomed to fighting those battles, and the reimbursement models are built to at least acknowledge and discuss these over reasonable lengths of time. The anesthesia stipends required today for reliable coverage are a paradigm shift for the industry, and ASCs and Hospitals have taken the first waves across the bow. The systems we work within were not designed to account for anesthesia expenses borne by a facility.
George Hanna, MD. President, Director of Pain Management and Chief Transformation Officer at VIP Medical Group’s Vein Clinic and Pain Treatment Center (New York City): The expense most out of sync with reimbursement today is the administrative and operational cost required simply to get paid for care that is already clinically appropriate. Prior authorization, denials management, audits and appeals have effectively become a de facto operating expense category for ASCs and medical practices alike, requiring growing internal teams and external vendor support as payer processes become more complex and opaque.
This “cost of payment friction” has grown materially faster than reimbursement, turning revenue cycle infrastructure into one of the fastest-rising expense lines for independent ASCs. Beyond the financial impact on providers and facilities, these friction points contribute to delayed care, higher total system costs, and, ultimately, real harm to patients when clinically appropriate care is slowed or deferred by administrative barriers.
Narasimhan Jagannathan, MD. Division Chief of Anesthesiology at the Phoenix (Ariz.) Children’s Hospital: The expense most out of sync with reimbursement today is anesthesia labor costs. Compensation has risen significantly due to workforce shortages and market competition, while reimbursement from Medicare and Medicaid has not kept pace with inflation or the true cost of delivering 24/7 coverage. This growing gap increases hospital subsidy requirements and creates financial pressure across surgical service lines. Over time, this misalignment threatens anesthesia availability. When reimbursement does not reflect the real cost of stable coverage, access to surgical and procedural care relies more on institutional subsidy than on sustainable payment models.
Neal Kaushal, MD. Executive Director of General GI and Endoscopy at OU Health (Edmond, Okla.): From a GI ASC perspective, labor is the expense most out of sync with reimbursement today. Wage inflation for experienced endoscopy nurses, techs, and anesthesia support has climbed double digits while GI procedure reimbursement has remained flat or declined, compressing margins on even high-volume centers. Unlike supplies, labor can’t be negotiated away without risking quality, turnover, and room efficiency—yet staffing is the single biggest driver of on-time starts, turnover velocity, and patient experience. The playbook has to shift to smarter staffing models, cross-training, technology that reduces touch points, and scope standardization to protect throughput. If we don’t realign productivity with labor cost, even well-run GI ASCs will struggle to keep pace with the economics of today’s reimbursement environment.
Earl Kilbride, MD. Orthopedic Surgeon at Austin (Texas) Orthopedic Institute: With our population aging, the Medicare numbers are rising. Many cases can be performed safely in the ASC setting but aren’t done there because implants are not a separate reimbursement. They include the total reimbursement, and one can easily be upside down from a revenue to expense ratio for a particular case. So unfortunately, these are done in a much more expensive location, such as an inpatient hospital.
Scott Kulstad. CEO of St. Paul (Minn.) Eye Clinic:
1. Labor cost (nursing, techs and physicians) growth outpaces other categories
- ASCs face wage inflation, competition with hospitals and other larger centers, and permanent shifts in staff expectations, pushing operating expenses higher while margins shrink.
- Single‑specialty centers, especially ones that sit lower on the reimbursement ladder, find it difficult to match hospital pay rates or rates from larger centers.
- In high–cost-of-living markets, hospitals outbid ASCs, forcing ASCs to offer signing bonuses and higher wages, often unsustainable for smaller centers.
2. Anesthesia coverage is also often misaligned:
- ASCs increasingly must offer anesthesia subsidies just to keep coverage intact due to workforce shortages and declining anesthesia reimbursement.
- These subsidies were rare a few years ago but are now becoming material operating expenses that commercial contracts do not account for.
Medical supplies and pharmaceuticals are also rising, but management interventions such as standardization and aggressive vendor negotiation can offset the impact of such cost increases. Labor, by contrast, is structurally rigid and directly driven by market competition.
Jessica Lam, PhD. Practice Manager of Pacific Coast Anesthesia (Los Angeles): Anesthesia staffing expense is the most misaligned with reimbursement today.
Reimbursement is tied to billable case time, but staffing costs are driven by coverage requirements, fixed schedules and the need to have anesthesiologists on site and available regardless of daily volume variability. That mismatch makes anesthesia one of the hardest service lines to budget accurately under traditional reimbursement models.
Benjamin Levy III, MD. Gastroenterologist at University of Chicago Medicine: Several amazing new technologies that improve patient care are now available for gastroenterology use at both ASCs and hospitals, but facilities aren’t always directly reimbursed for their utilization. Ideally, ASCs should receive partial reimbursement for computer-aided detection systems like GI Genius, endoscopy use of carbon dioxide for insufflation (to prevent bloating and abdominal discomfort following procedures instead of room air), and accessory devices such as distal attachment caps plus Endocuff (flexible attachment) to improve polyp visualization. This would encourage use of technologies that improve accuracy and comfort. Unfortunately, inflation-adjusted Gastroenterologist reimbursement has declined while the costs of some endoscopy equipment and supplies are rising.
Paul Lynch, MD. Founder and CEO of US Pain Care (Scottsdale, Ariz.): One of the expenses most out of sync with reimbursement today is the cost of advanced medical devices, particularly in neuromodulation.
As part of my work at US Pain Care, we’ve focused on building neuromodulation centers of excellence across the country. Many of the technologies we use are truly cutting edge and, in some cases, are being adopted within the first 12 months after FDA approval. In that early adoption window, reimbursement often lags behind innovation. Payers may still view these therapies as experimental, coverage policies may be immature, and there is frequently limited competition in the marketplace.
The result is that physician-owned centers can find themselves in a position where the cost of a device exceeds the actual reimbursement for the procedure. For small, 100 percent physician-owned facilities that function like small businesses, this misalignment creates real operational strain and can slow patient access to meaningful innovation.
We’ve worked hard to address this by building thoughtful, long-term partnerships with multiple device companies that understand these dynamics and are willing to collaborate on sustainable models during the early phases of new technology adoption. Those partnerships have become one of the strongest aspects of our platform and have allowed us to continue offering patients access to next-generation therapies while maintaining responsible financial stewardship.
The broader opportunity is to better align reimbursement timelines with the pace of innovation. When coverage frameworks evolve alongside new technologies, it enables responsible adoption, protects physician-owned practices, and ensures that patients benefit from advances in care without unnecessary delays.
James Mitchell, MD. Hip and Knee Replacement Specialist at Total Joint Solutions (Oklahoma City, Okla.): I believe the expense of hospital care in hip and knee replacement is out of sync with reimbursement. The hospital pays too much in salaries, wages and benefits to make primary, elective, hip and knee replacement in the healthy population a viable business model. The quality and cost in the ASC setting are far better suited to current reimbursement, and provide far better value.
John Prunskis, MD. Medical Director and Principal of DxTx Pain and Spine (Chicago): Virtually all expenses have gone up higher than the reimbursement: Staff salaries, electronic health records and certain equipment. Delete it to perform procedures and surgeries. This is particularly troubling given the fact of the record profits of health insurance companies as well as the high cost of hospital-based care versus not hospital care.
Faisal Rahman, PhD. Member and Owner of Munster (Ind.) Surgery Center: What we see is the change in the insurance coverage of the patients. Increasingly, they have higher co-pay and out-of-pocket costs. Collecting from patients costs more and aggressive collection efforts result in bad reviews and return volume of chronic patients. The increase in costs of hiring and retaining staff is not reflected in the reimbursements. Drastic cost management may impact quality of care.
Marjorie Reiter. Administrator of the SurgCenter of the Potomac (Bethesda, Md.): There are two that come to mind — the first is labor and the second is the cost of new technology. Yes, medications and disposable supplies are increasing, but there are usually ways to tap into purchasing collectives, group purchasing organizations, etc. so at least partially control these.
I find that generational differences affect the workforce. It’s been my experience that the older edge of the workforce (Boomers in particular) are more apt to stay at a job for longer periods of time and work through the HR process to increase their rate of pay. The younger edge of the workforce, Gen Z and Millennials, seems more apt to jump from job to job to leverage their payrate in that manner without any particular loyalty to an institution. There are certainly exceptions to the rule, and I know I am speaking in sweeping generalizations, but these are my observations.
The flip side of this is that there are certain professions — anesthesia comes to mind — where the shortages are well known. This leads to a supply side shortage with a high demand and these individuals can command out-of-proportion fees which are not well-reimbursed by insurance. The shortfall then needs to come from somewhere, and this may lead to a nasty cycle of financial brinkmanship.
