While ASCs can save money in the short term by cutting hours or delaying upgrades, some leaders feel long-term success depends on keeping experienced staff and maintaining strong compliance systems.
Raghu Reddy, chief administrative officer of Southfield, Mich.-based MiOrtho Surgery Center and member of ASCA’s education and programs committee and quality committee, joined Becker’s to discuss the most difficult areas of cost control for ASCs.
Question: What areas of cost control are the hardest to manage while maintaining quality care?
Raghu Reddy:
1. Staffing
Staffing is the single most significant expense in an ASC, as in most businesses. While reducing staffing hours, adjusting ratios or relying heavily on per diems or agency nurses may cut costs in the short term, the tradeoff is often high turnover and diminished quality of patient care. Retaining experienced staff is crucial. Long-tenured employees who understand ASC policies, procedures and workflows — and who have built trusted relationships with physicians and leadership — are invaluable. Investing in their retention may feel costly upfront, but it pays dividends in continuity, efficiency and patient satisfaction over the long run.
2. Supply chain
The cost of equipment, supplies and implants continues to climb, driven in part by tariffs and broader market pressures. Negotiating competitive pricing is especially difficult for standalone ASCs without the leverage of a hospital or management company partner. Larger independent ASCs may still manage effectively today, but rising costs are inevitable across the board. The real challenge lies in balancing surgeon-specific preferences with supply chain efficiency. Many ASCs are also hesitant to upgrade technology, given thin margins and steep capital costs, often pushing these investments further down the road despite the clinical advantages they could bring.
3. Regulatory and quality compliance
The regulatory and quality compliance burden is increasing year over year. To keep up, ASCs must invest in technology such as EHRs, compliance platforms and reporting software. Like medical equipment, these systems come with significant upfront and ongoing costs — licensing, upgrades and maintenance. Nevertheless, this investment is unavoidable: maintaining the highest quality of care, ensuring strong patient outcomes and meeting accreditation standards all depend on a robust compliance infrastructure.
4. Revenue cycle management
Revenue cycle challenges represent another major hurdle. Reimbursement rates have not kept pace with inflation and often fail to align with hospital outpatient department benchmarks. Because payer fee schedules and surgical volume primarily dictate revenue, ASCs face tight limits on their ability to invest in efficiency-driving initiatives. This imbalance underscores the need for legislative and payer reform to ensure ASCs remain financially viable while continuing to deliver cost-effective, high-quality care.
