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Evolution & Acceleration of ASC Growth

February 28, 2025
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ERDMAN

A Data-Driven Approach for Health System Leaders

Over the past four decades, ambulatory surgery centers (ASCs) have transformed from a niche alternative for hospital-based surgery into a dominant force in procedural care delivery.

Today, ASCs are a key strategic consideration for hospitals and health systems as shifting payment policies, patient preferences, and physician alignment strategies accelerate their growth. Health systems that fail to recognize and respond to this shift risk losing market share, revenue, and operational efficiency.

Historical Evolution: From Alternative to Essential

The first ASCs emerged in the 1970s as a response to the cost and inefficiencies of hospital-based surgery. By the early 2000s, ASCs had gained traction, but most were physician-owned, single specialty and focused on high-margin, low-acuity procedures. These facilities were designed for a different era—many lack the flexibility, technology, and regulatory compliance standards needed for today’s surgical landscape.

Fast forward to today, and ASCs are now a centerpiece of the U.S. surgical ecosystem, driven by regulatory changes, technological advancements, and economic pressures. According to the Ambulatory Surgery Center Association (ASCA), more than 6,000 ASCs are now in operation, performing over 30 million procedures annually—a number expected to rise significantly over the next decade.

Key Factors Driving ASC Growth

Site-Neutral Payments & Cost Advantages

Medicare and commercial payers have increasingly adopted site-neutral payment policies, incentivizing lower-cost settings for procedures that do not require a hospital OR. The 2024 Medicare Outpatient Prospective Payment System (OPPS) final rule expanded ASC reimbursement, narrowing the gap between hospital outpatient departments (HOPDs) and ASCs. Hospital-based procedures can cost 30% – 50% more than those performed in an ASC, making the shift to ASCs a critical strategy for cost containment.

Consumer Preferences & Patient Satisfaction

Patient experience has become a top priority for health systems, and ASCs consistently outperform hospitals in patient satisfaction ratings. A study by the Leapfrog Group found that 92% of ASC patients reported high satisfaction levels, compared to 79% for hospital-based outpatient surgeries. Factors like lower infection rates, shorter wait times, and more personalized care models make ASCs an attractive option for consumers.

Physician Alignment & Ownership Models

Physicians increasingly prefer ASCs due to the autonomy, efficiency, and financial incentives they provide. Health systems that develop or partner with ASCs are better positioned to align with surgeons and retain procedural volumes. According to VMG Health’s 2023 Multi-Specialty ASC Benchmarking Study, over 70% of ASCs have some level of physician ownership, enabling higher procedural efficiency and cost control.

Projected Demand for ASC & Hospital-Based ORs

The growth in ASC surgical volumes will require a significant expansion of operating rooms over the next decade. A recent analysis by Sg2 and Advisory Board projects a 25%–30% increase in the number of ASC ORs by 2035 to meet demand. Conversely, the need for hospital based ORs is projected to decline by 10%, particularly for outpatient procedures. More than half the states have Certificate of Need (CON) laws that restrict the supply of ASC developments/expansions.

While health systems may experience declines in surgical volumes for certain specialties, they have an opportunity to shift procedures to ASCs, freeing up hospital ORs for complex and emergent cases.

Strategic Implications for Health Systems

To remain competitive, hospital executives must conduct detailed, data-driven assessments to determine:

  • Which service lines should shift to ASCs based on physician preferences and financial and operational viability.
  • Optimal ASC locations based on market demand and physician alignment.
  • Investment strategies—whether to build, acquire, or partner with ASC operators.

Conclusion: The Need for a Proactive Strategy

The growth of ASCs is not a short-term trend—it is a structural shift in surgical care delivery. Health systems must proactively embrace this transformation by leveraging data-driven planning, financial modeling, and operational alignment. Those that fail to act risk losing market share to independent ASCs, disruptors, and competing health systems.

Now is the time for hospital executives to strategically assess and integrate ASC expansion into their broader growth and financial sustainability strategies.

Jim Medendorp

Managing Director, Management Consulting
+1 608.410.8000

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