ASCs are being squeezed from all sides, with rising expenses and flat reimbursement making the traditional ASC value proposition more difficult to sustain.
Leaders point to five major cost pressures reshaping the landscape:
1. Labor costs
Labor remains one of the most stubborn headwinds as ASCs compete with hospitals and health systems for a shrinking pool of nurses, techs and physicians. Rising wages, changing staff expectations and a post-pandemic labor model are pushing operating costs higher and margins lower.
Healthcare staffing costs are climbing across the board. In 2023, 43% of ASCs reported operating budgets of $3 million or more, up from 32% in 2022, according to a survey from OR Manager, with a substantial portion tied to labor.
“Wage inflation hasn’t slowed, staffing expectations have shifted permanently, and the ASC labor model hasn’t fully adapted to that new reality,” Omar Khokhar, MD, a gastroenterologist at Illinois GastroHealth in Bloomington, told Becker’s.
He added that the “steady drip of commercial-to-Medicare mix shift, prior authorization friction and tightening payer fee schedules” means the ASC advantage now needs “real enforcement.”
To stay competitive, many centers are struggling to keep compensation on-par with hospital wages, something especially difficult for single-specialty centers that sit lower on the reimbursement ladder.
Kayla Schneeweiss-Keene, BSN, RN, administrator of Houston-based Mann Eye Institute, said the organization’s biggest workforce challenge is keeping up with hospital pay rates, particularly as a single-specialty ophthalmology ASC, which is reimbursed less than specialties such as cardiology or orthopedics.
“It’s hard to keep pace financially and give them hourly rates that the nurses are asking for,” she said. “And it’s hard to keep people because they’re obviously wanting more money.”
The pressure is even greater in high cost-of-living markets, where staff are less willing to trade pay for benefits like predictable hours or improved work-life balance. In New York City, hospitals often outbid ASCs for talent, fueling turnover and driving up recruitment expenses, according to Sarah Malaniak, administrator of Peakpoint Flatiron Surgery Center. She said centers trying to compete are offering higher wages, signing bonuses and better benefits, costs smaller ASCs can’t always sustain.
Some leaders say wage growth for staff has begun to level off, but physician recruitment has become the bigger pain point. For Gastro Health CMO Eugenio Hernandez, MD, most labor expenses have “stabilized,” yet physician costs are still climbing.
“As there are less and less physicians available in the recruiting pool, there’s more competition, which means the cost of recruiting has gone up for all of us, as we run in competition with hospital systems and other groups,” he said.
Supply costs
Even as some pandemic-era disruptions have eased, ASC leaders say supply and implant costs remain elevated, particularly in device-heavy specialties.
“We’ve seen big increases since the outset of COVID in supply chain costs,” Jim Freund, managing partner at Physician Transaction Advisors, told Becker’s. “Those are real challenges.”
On the ground, ASC administrators report ongoing pressure on supply pricing, especially in orthopedics and other implant-driven lines. Greg DeConciliis, administrator of Boston Out-Patient Surgical Suites, told Becker’s he doesn’t see much relief.
“On the supply side, implant prices, especially in orthopedics, spiked during COVID-19 and haven’t really come back down. At the same time, there’s a lot of new technology entering the space. Advancements like robotics, AI and newer products are exciting, but they come with added cost. So the expense of doing business and performing procedures has stayed high and, in many cases, continues to rise.”
That leaves ASCs struggling to reconcile expectations for technology from surgeons and patients with economics that don’t always work in a freestanding setting. And these pressures are expected to get worse — medical supply chain costs are projected to increase 2.41% in 2026.
Anesthesia costs
Anesthesia coverage has become one of the biggest issues facing ASCs. In some markets, anesthesia groups now require stipends or subsidies to staff cases. In others, consolidation has left ASCs with fewer options and higher prices.
The share of ASCs expecting to pay anesthesia stipends rose from 28% in 2024 to 44% in 2025, according to a VMG Health report.
Vijay Sudheendra, MD, president of Providence, R.I.-based Narragansett Bay Anesthesia, said anesthesia costs and coverage are a top concern for ASCs in 2026, with 67% of surveyed leaders citing anesthesia as a significant financial challenge, according to VMG.
“There is a growing mismatch between what payers reimburse for anesthesia services and the actual cost of recruiting and retaining high-quality providers, especially in markets with high demand and limited supply,” Dr. Sudheendra told Becker’s. “Many centers are now paying inflated stipends or relying heavily on expensive contract groups, which erodes margins on high-value cases like spine, total joints and complex GI.”
Payer contract issues
As expenses rise, many ASC leaders say revenue isn’t keeping up. Contract negotiations with payers are tougher, even when rates are set, denials, prior authorizations and fee schedules make it difficult to collect on them.
“The challenges with payers — both in understanding what they’re actually going to pay and in rates, getting approvals, getting contracts — is a big item,” Mr. Freund said.
Dr. DeConciliis told Becker’s his center has been “dealing with payer pressure in our area, including reduced reimbursement, and that’s been a real struggle.” Lower rates on core procedures, layered with higher fixed costs, leave little margin to invest in new service lines.
For Theresa Broniak, director of Detroit-based Ambulatory Surgical Services of Henry Ford Health, reimbursements and payer mix are “becoming more of a focus moving forward.” She said payer behavior varies significantly by procedure and specialty.
“In the sites that I oversee, it ranges across specialties from orthopedics to ophthalmology to otolaryngology, and the trends that we’re seeing with payers changing in the different markets are really something that I’m looking at almost daily,” she said. “We’re seeing more splitting of commercial payers when it comes down to certain procedures. So we are getting push back on reimbursements that we hadn’t received in the past. We are a combination of employed and private providers, and we do see a good amount of reimbursements from governmental payers, but the commercial ones are definitely becoming the ones to watch.”
Additionally, revenue cycle challenges intensify the impact of tight contracts. Delayed payments, denials and administrative burden can strain cash flow.
“Revenue cycle challenges represent another major hurdle,” Raghu Reddy, chief administrative officer of Southfield, Mich.-based MiOrtho Surgery Center and member of ASCA’s education and programs committee and quality committee, told Becker’s. “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.”
Competition for outpatient cases with hospitals
On top of cost and reimbursement pressures, ASCs increasingly compete directly with hospitals and health systems for outpatient surgical volume. As more procedures shift out of the inpatient setting, hospitals view outpatient cases as critical to their own financial survival.
“Obviously the competition from hospitals for outpatient cases, as they see this as not just a means to retain their cases but really kind of a matter of survival,” Mr. Freund said. “As cases move out of inpatient to outpatient settings, they want to continue to hold on to those. So that, I think, is another challenge for independent physicians who are out there on their own.”
At the same time, ASCs remain a lower-cost site of care for payers and patients. According to a 2023 analysis by Blue Health Intelligence, the Blue Cross Blue Shield Association’s data analytics company, procedures done in HOPDs can cost 58% more than a physician’s office or ASC. Facility fees for colonoscopy procedures covered by private health insurance are 55% more at hospitals compared with those at ASCs as of May 2023, according to a study published in JAMA Health Forum.
