As orthopedic ASCs expand to keep pace with the outpatient shift, the economics behind that growth are becoming more complex. While ASCs are often positioned as a lower-cost alternative to hospitals, industry leaders say a widening gap between reimbursement and the true cost of care is putting pressure on margins, operations and long-term sustainability.
From anesthesia coverage to administrative burden, these five cost drivers are repeatedly cited by leaders:
- Reimbursements fail to keep pace with operational costs: Rising expenses across labor, anesthesia and supplies exceed Medicare and commercial payment updates, which remain relatively flat and tied to procedure-based rates that increase only marginally each year, even as the cost of delivering care has shifted significantly.
- Anesthesia reimbursement in particular is misaligned with coverage costs: Payment models remain tied to billable case time, while the actual cost structure has shifted to fixed coverage, requiring providers to be staffed and ready regardless of daily volume.
As Deena Edwards, RN, administrator of The Surgery Center of Southwest Ohio in Moraine, said, “Anesthesia continues to get lower reimbursements but costs more and more,” forcing many centers to subsidize coverage to maintain operations.
- Supply and implant costs: Rising implant, disposable and pharmaceutical costs are among the fastest-growing expenses in orthopedic ASCs.
In response, leaders are shifting from broad cost-cutting to more precise strategies, including physician alignment, case-level cost tracking and standardization to reduce variation. Improving throughput, optimizing block utilization and aligning supply use with demand are also becoming critical to maintaining financial performance under increasingly constrained payment models.
- Lower total costs don’t always translate to lower patient payments: While orthopedic procedures performed in ASCs consistently have lower total costs than hospital outpatient departments, in some cases by more than $6,000 per case, patient out-of-pocket expenses don’t always follow the same pattern.
For higher-acuity procedures such as total joint replacements and spinal fusions, patients may pay less in hospital outpatient settings due to differences in Medicare cost-sharing, highlighting a disconnect between system-level savings and patient financial impact.
- Administrative burden spawns a new reimbursement-related cost: Amid the growing complexity of prior authorization, denials, audits and appeals, ASCs are investing in staff and external support to navigate payer requirements, turning revenue cycle management into a significant and rising cost center. This “cost of getting paid” is growing faster than reimbursement itself, adding financial strain even when care is clinically appropriate and already delivered.
