Originally published in Modern Healthcare, June 16, 2025 11:45 AM, by Alex Kacik
Health systems are expanding their ambulatory surgery center networks in a bid to lower costs and manage overcrowded operating rooms.
ASCs can provide a more convenient, lower-cost alternative for lucrative procedures like knee replacements and cataract surgeries. Health system executives say the transition of many services from hospitals to surgery centers is inevitable. Advancing technology, shifting regulations, patient preference and pressure from insurers and lawmakers to reduce hospital costs will make sure of that, they said.
Related: Why systems are pumping billions of dollars into outpatient expansion
Ascension’s recent $3.9 billion bid for ASC company Amsurg underpins a wave of ASC-linked dealmaking, physician-backed joint ventures and healthcare construction. Private equity firm Welsh, Carson, Anderson & Stowe also announced an investment Monday in ambulatory surgery center operator Constitution Surgery Alliance.
Such activity is expected to surge, executives said.
“This is the most activity I have seen from health systems that are getting serious about deploying ASC assets. There probably is not a health system in the U.S. that has not talked about it,” said Mark Garvin, Phoenix, Arizona-based Banner Health senior vice president of partnership and venture development. Banner, which jointly operates 33 ASCs with ASC management company Atlas Healthcare Partners, plans to add nine surgery centers over the next two years, he said.
“I’m bullish on growth — you not only have pressure from commercial payers to get surgery procedures in the appropriate setting, but also site-neutrality,” Garvin said.
Insurance companies are increasingly denying claims for hospital-based care that could safely be performed in lower-cost settings. Insurers may also discount copays or offer other financial incentives to patients who receive care at ASCs.
“There are a bunch of hospitals that haven’t heavily invested in ASCs because they haven’t had the incentives from payers to push them into the game,” said Cody Taylor, senior manager at consultancy LBMC. “Health systems are realizing that is no longer an option. It is a necessity to remain competitive.”
Lawmakers have also pushed many proposals over the last two years that would’ve implemented some form of site-neutral Medicare payments for outpatient care, which would require health systems to charge the same prices for services whether they are performed in a hospital or another location.
Site-neutral payments are currently in place for a relatively small set of evaluation and management services. While the future of legislation isn’t clear, eliminating the payment boost for hospital-based outpatient care could speed up the transition to ASCs, which have lower overhead costs than hospitals.
Health system executives are preparing for the possibility of broader site-neutral pay policy.
“A health system is better off creating an ambulatory strategy where we can shift cases into an ASC versus losing that volume in totality or receiving reimbursement that may not cover our hospital operating room costs,” said Lauren Madigan, chief operating officer at Albuquerque, New Mexico-based Presbyterian Healthcare Services.
Still, health system executives say the main drivers behind ASC expansion come from patients. ASCs are often more convenient locations for relatively healthy patients’ surgeries, feature shorter stays and tend to produce higher patient satisfaction scores.
These additional access points can also allow hospitals to focus on providing complex care in their operating rooms, which are often full, executives said.
“We are not investing in ASCs to capture more market share, we are doing it because our hospital operating rooms are chock-full,” said Dr. Arby Nahapetian, chief clinical officer at Roseville, California-based Adventist Health.
Both patients and physicians tend to prefer ASCs’ streamlined structure, executives said. Surgery centers can also allow health systems and physicians to work together more closely, executives said.
Novant Health plans to double its network of 20 ASCs over the next several years through construction and acquisitions, said Leslie Barrett, senior vice president of ambulatory surgery strategy and execution at the Winston-Salem, North Carolina-based system.
Competition is poised to increase in North Carolina as state lawmakers push to repeal the state’s certificate of need law. ASC joint ventures that split revenue between health system and physician owners can help solidify affiliations between Novant and independent physicians in that environment, Barrett said.
“We have an opportunity to create alignment with physicians through ambulatory surgery centers,” she said.
Health systems are typically majority owners of the ASCs in these joint ventures. The majority stake allows systems to control operations and leverage their branding while negotiating with commercial insurers, executives said.
However, health systems must navigate a complex regulatory framework.
The Centers for Medicare and Medicaid Services continues to adjust the inpatient-only list, which dictates procedures that must be performed in a hospital rather than an ASC or clinic. In addition, the federal anti-kickback statutes require a physician’s investment interest in an ASC to be directly proportional to the amount of capital invested, not the amount of care a physician provides. Federal overseers have also raised concerns about hospitals cherry-picking relatively healthy patients as they expand ASC-based services.
Health systems are willing to spend more on compliance given how quickly ASC patient volumes are growing, executives said.
“You already see the shift to outpatient care and ASCs, but that is only going to grow,” said Dr. Christopher Bucciarelli, vice president of ambulatory services and chief medical officer at Clearwater, Florida-based BayCare Health System.