The current momentum for growth in the ASC market is significant. Medicare policy continues to expand the range of procedures that can be performed in the outpatient setting, commercial payers favor ASCs as a lower-cost site, and physicians and patients often prefer it. Yet the economics of building a center have grown more difficult as construction, equipment and staffing costs have outpaced largely flat reimbursement in recent years.
During an executive roundtable luncheon at Becker’s 23rd Annual Spine, Orthopedic & Pain Management Conference in Chicago on June 12, three leaders walked an audience of ASC operators and owners through how to plan, build and operate an ASC that can still turn a profit. The session was hosted by Apex Design Build, Innovative Sterilization Technologies and Quality ASC Consulting. The panelists were:
- Barbara Walker, ASC development manager at Apex Design Build in Chicago, who has worked on roughly 90 surgery center and surgical hospital projects nationwide
- Tim Tzimas, president and CEO of Innovative Sterilization Technologies, with nearly three decades in orthopedic and medical-device operations
- Katie Pierson, DNP, RN, CASC, co-founder and COO of Quality ASC Consulting, with 20 years of nursing experience and a background in ASC leadership
Below are four takeaways from their conversation.
Note: Quotes have been edited for length and clarity.
1. The post-COVID cost structure has turned development math upside down
Ms. Walker covered research that framed the central tension of the session: capital costs have exploded while reimbursement has barely moved. Average construction costs have climbed from about $270 per square foot in early 2020 to between $500 and $700 today, with equipment up 25% to 50%, staffing and rent each up roughly 35%, and financing markedly more expensive. Reimbursement, by contrast, has risen only 18% to 25% over the same six years.
“If you were building a house, this house is going to topple over because it is top heavy on expenditures and light on revenues,” Ms. Walker said. The implication, she argued, is that efficiency is no longer a nicety — it is the precondition for a center achieving financial stability.
2. Accreditation is a strategic choice, not a checkbox
Ms. Pierson walked through the trade-offs among accrediting bodies, noting there is no universally “better” option — only the right fit for a given center’s acuity, payer requirements and exit strategy. Lower-acuity centers often gravitate to one path, she said, while operators wanting more rigor or planning an eventual hospital sale may choose another.
She also pressed operators to question accreditation they don’t actually need. In states that don’t mandate it, Ms. Pierson said, some centers still pursue costly surveys simply because “that’s what we’ve always done.”
3. Build for the plan, not the dream
A recurring theme was the danger of overbuilding. Ms. Walker noted that the “build it and they’ll come” approach has too often saddled physician groups with centers running below capacity, and that the problem concentrates among newer entrants: smaller physician groups whose “vision is a little bit bigger than their reality.”
The discipline cuts both ways. Several panelists endorsed building shell space — roughing in additional operating rooms that aren’t finished or equipped until volume justifies them — as far cheaper than retrofitting later. One veteran multi-center developer in the audience captured the logic: “Don’t build for today, build for what you think is going to be brought on… because by the time you have it finished, it’s already been outdated.” The shell space doubles as storage in the interim, he noted, so it isn’t dead square footage.
4. Sterile processing is where higher acuity quietly breaks down
As more complex orthopedic and spine cases migrate to the ASC, Mr. Tzimas and Ms. Walker pointed to sterile processing as an overlooked bottleneck. Mr. Tzimas, who spent years building a robotics platform on the manufacturer side, said the industry “bombarded” centers with instrumentation without solving the downstream throughput problem it created. When a center’s processing capacity can’t turn trays over fast enough, operating rooms sit idle.
Ms. Walker put the stakes plainly: “I kind of look at the SPD department as the heart of the ASC, because if it’s not working, then nothing else is going to happen.” The fixes range from offsite sterilization to newer reprocessing technologies that shrink both the instrument sets a center must buy upfront and the storage space it has to build.
Where surgery center leaders go from here
The throughline across all four takeaways was prevention over correction. Panelists encouraged attendees to vet sites and business plans before signing, choose accreditation deliberately, size the build to the proforma and design workflow — especially sterile processing — for the volume actually coming. In a market where the cost structure no longer forgives mistakes, the panelists argued, the centers that succeed will be the ones that plan for efficiency from the first decision rather than engineering it back in after 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.