The Business Corner is a bimonthly column by Shakeel Ahmed, MD, CEO of St. Louis-based Atlas Surgical Group. This is the second installment.
Over the last few months, I have noticed a subtle but important discussion in the hallways of ASCs, and in the muted discourse of ASC owners around the country. The proverbial sword of Damocles is not so much the ever-looming threat of hospital takeover or declining reimbursement. The issue at the front of the discussion now has become an uncontrolled rise in the cost to do business. The issue now is not so much whether you can run a surgery center. It’s who can actually make money doing it.
I have noticed that volume continues to grow around the country. Sadly, profitability is not keeping pace. I am personally aware of innumerable centers around the country that are barely getting by financially. Their books are not showing profits year after year. They’re making ends meet. A decade ago, ASC EBITDA margins commonly sat in the low-to-mid 30% range. In late 2024 and early 2025, while multiple regional ASC operators still reported year-over-year case growth in high single-digit numbers, and yet reported either flat or declining EBITDA. The culprit is not demand — it is cost structure.
While we can always blame this cost issue on rising labor costs and cost of goods, a newer demon in town is case complexity creep. As higher-acuity procedures continue to migrate into ASCs, the operational budget of these heretofore simple facilities is rising exponentially with them. In 2024, CMS expanded the ASC Covered Procedures List by more than 300 additional codes. While that expansion looks positive on paper, the reality on the ground is more complicated. Higher-acuity cases routinely bring operating cost increases in the range of 30% to 40% compared with the traditional low-complexity procedures most centers were built around. These complicated surgeries bring with them longer turnover times, higher implant exposure, higher staffing and anesthesia requirements, and an unmatched rise in revenues from these CPT codes that somehow doesn’t translate into the kind of profits that simpler gastrointestinal or pain management procedures used to bring to centers in the past.
The payers, at the same time, continue to become more aggressive and more sophisticated. I speak from experience when I say some of these private insurers will take two to three years to come to an agreement on your contracts and your reimbursement for your facility. Add to that increasing prior authorization friction and their use of site-neutral payment rhetoric to push down facility rates. They’re speaking from both sides of their mouths. On one hand, they’re encouraging migration out of hospitals. On the other hand, they are preemptively crushing rising demand for reimbursement by private surgery centers. This reminds you that while growth is available and inevitable, it is not forgiving.
Labor dynamics continue to remain a major villain in this movie. Wage inflation continues to play havoc with the stagnant profit margins of outpatient surgery centers. From 2023 through 2025, labor costs inside ASCs rose by an estimated 20% to 25%. Over that same stretch, Medicare’s total ASC reimbursement updates amounted to less than 7%. There also remains an underlying shortage of experienced ASC staff. Successful centers, in my opinion, will do better not by overpaying, but by redesigning schedules, eliminating inefficiencies and tightening roles that previously went unchallenged. Emphasis on the word unchallenged.
Another more recent development over the last year or two is the re-emergence of balance-sheet stress. I have noted personally, and through conversations around the halls, that higher interest rates have changed the rules for debt-funded expansion. There was a time when centers could take on this debt because of the lower rates associated with it, but now higher monthly obligations — often without a corresponding increase in cash flow — are destroying profitability margins. This, in turn, is curbing expansion, equipment purchases, and even physician buy-ins. Money is available. It is just much more expensive than it used to be.
Operational discipline now matters more than scale. Please understand, bigger is not better. Some of the strongest-performing centers I see today are not the largest — they are what I would like to call the most intentional. They know exactly what they want, which doctors they want, which payers they will put up with, and which expenses they will refuse. These are the facilities that are cognizant of what makes money and what doesn’t. In my personal opinion, staying with one to two specialties that you have mastered yields better results than running a center with uncontrolled and unbridled surgical schedules across multiple specialties.
The other ingredient — the secret sauce to success — is physician ownership. That remains a critical advantage in our field. Passive ownership without accountability never works. It is actually detrimental to the profit margins of your facility. If their skin and money are not invested in your center, they will not help you rise. This is how the world of business works. Engage physicians not just through performance, but by offering them ownership and involvement. A rising tide raises all ships.
My advice to novice operators: learn to say no intelligently. Say no to unprofitable contracts, say no to low-producing surgeons, and most importantly, say no to expansion that looks good on paper but ultimately weakens the core business. This is not a retreat. It is a recalibration.
The key takeaway I would emphasize is this: a successful ASC owner should always remember that the farther blood has to travel from the heart, the more sluggish its flow becomes. In the human body, that slowing rarely leads to catastrophe. In business, however, distance from the core can be fatal. The further you drift from what you do best, the more momentum you lose. Stay close to the heart of your operation, where decision-making is sharp, execution is efficient and value is created.
