ASCs have long been pitched to physicians as an efficiency play, with lower overhead, faster turnover abd more control than a hospital operating room offers.
For Mikel Daniels, DPM, that pitch has gotten harder to cash in on as health plans stop paying for the flexibility that made building them worthwhile in the first place.
Dr. Daniels is president and chief medical officer of WeTreatFeet Podiatry, a Maryland-based multispecialty practice he has built from a single office into 10 locations and 10 physicians since going into practice in 2002. Three of those offices house single-specialty ambulatory surgical facilities, and the group also runs durable medical equipment, consulting, billing and clinical trials arms that together support roughly 50,000 patient visits a year.
Dr. Daniels is also a partner in a separate multiphysician, multispecialty surgical center in Washington, D.C. — by his account the sixth freestanding surgical center in the district and the only one that is fully physician-owned. The center received its operations license in July 2025.
While that center is still building towards full surgical capabilities and securing payer contracts, the gap exceptions that let out-of-network ASCs get cases authorized and paid are disappearing across his entire practice, not just in Washington.
“The model that we all functioned under forever of getting gap exceptions for cases is going away,” Dr. Daniels said. “We’re finding it increasingly difficult to get anything authorized when we’re not in network. We personally, in our own centers, do not participate with United Healthcare — never have. And now we can’t do any United cases because they won’t let us take them to the hospital for an outpatient, and now they won’t give us gap exceptions. What do you want us to do with your patients?”
Authorizations that do go through don’t always pay what was agreed to, he said.
“We’ve had crazy things happen where we agree on an appropriate fee for a gap exception, and then we get a check for $112,” Dr. Daniels said.
It’s a sharp reversal from when he started building surgery centers in 2006, he said, when out-of-network billing could return several times a claim’s face value. That margin, he said, is gone.That erosion is why Dr. Daniels has stopped describing his surgery centers as profit centers at all.
“The way I see our ambulatory surgical facilities is more as time machines than money makers, just because it’s so inefficient to go to the hospital to do outpatient cases,” Dr. Daniels said.
Skipping the hospital means skipping its overhead, too, when it comes to both minutes and administrative burden. That includes travel time, redundant paperwork, duplicate pre-operative clearances for patients who differ from an arbitrary cutoff by a single year of age. It also means a calmer schedule for the clinicians who work there.
The question of profit margins, however, has become more complicated as the value of OR minutes rivals that of dollars in some cases.
“It’s kind of sometimes hard to tell whether or not we actually break even on our surgical facilities,” Dr. Daniels said. “But again, it’s a time machine for me: not having to travel back and forth to the hospital, not having to do the hospital-based paperwork, not having to get the same pre-ops just because somebody’s 36 instead of 35. It makes a huge amount of difference.”
What has kept the broader practice growing through that uncertainty, Dr. Daniels said, is that the ASCs were never meant to carry it alone. WeTreatFeet’s durable medical equipment, consulting, billing and clinical trials arms generate revenue the surgery centers can no longer guarantee on their own.
“You can’t survive on procedures and E/M codes anymore. You just can’t,” Dr. Daniels said. “That’s why we have our whole series of ancillaries that actually provide our practice with enough revenue to keep the doors open.”
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
