Medical advances and economics are fueling ASC growth

For more than two decades, ambulatory surgery centers (ASCs) have steadily reshaped where Americans receive surgical care. Once limited to relatively routine procedures, these outpatient facilities now handle a broad and increasingly complex mix of surgeries from cardiac ablations and spinal fusions to full knee and hip replacements. If the last 20 years are any guide, this trend is far from over. 

Moving forward, more procedures will shift to ASC settings, says Capital One Managing Director Gary Lieberman, an expert in the healthcare services industry. “People probably thought we were in the seventh inning 10 years ago. Today, we may only be in the fifth or sixth.”

Recent changes in Medicare coverage have accelerated the change. For decades, the Centers for Medicare & Medicaid Services (CMS) maintained an inpatient-only list—a catalog of roughly 1,700 procedures that Medicare would reimburse only when performed in a hospital setting. That list is being phased out.

A new rule at the start of this year removed 285 mostly musculoskeletal procedures from the inpatient-only list, and CMS plans to eliminate the list entirely by 2029. Simultaneously, it added 547 procedures to the list of procedures that can be performed in an ASC—the largest single-year expansion in the program’s history.¹ Medicare now allows complex joint replacements, vascular interventions and other procedures that would have seemed unlikely candidates for same-day surgery not long ago.

CMS cited advances in medical technology and surgical technique as the reason for the changes, which also allow physicians to exercise more clinical judgment in determining appropriate care settings for their patients. The policy shift effectively accelerates a migration that has already been underway and signals that the regulatory environment will continue to favor outpatient care. The result is not just an incremental change, but structural expansion of what physicians can safely and economically perform in outpatient settings. 

The financial case for ASCs is compelling for patients, insurers and Medicare alike. Hospital outpatient departments commonly charge commercial facility fees that are more than 50% higher than ASCs for comparable procedures, according to research published in the American Journal of Managed Care.² A KFF analysis of Medicare payment policy found that the government pays hospitals at substantially higher rates than ASCs for the same outpatient services.³ 

For procedures already shifting to the outpatient setting, the savings are significant. Outpatient joint replacements performed in an ASC cost about 40% less than those performed in a hospital. Colonoscopy screenings in a hospital cost about 32% more than in an ASC.⁴

As more patients enroll in high deductible health plans and take on greater out of pocket costs, they are playing a more active role in site of care decisions, often favoring lower cost outpatient settings.

ASCs rely on a fundamentally different operating model that is built around predictability rather than the broad, unscheduled demands of a full-service hospital.

Unlike hospitals, ASCs don’t operate emergency rooms. There are no unscheduled trauma cases that might displace a scheduled surgery or disrupt clinical staff. Surgeons work in what is known as “block time,” designated operating windows during which they can schedule patients back to back in a structured, consistent environment. The result is more efficient use of staff time, less downtime, and a supply chain that can be managed with considerably more precision than a hospital. 

This predictability appeals to clinicians as much as to administrators. Nurses, surgeons and anesthesiologists who value a structured work environment have increasingly gravitated toward ASCs. Patients, too, may prefer to avoid the ambient stress of a full-service hospital. Many report lower anxiety and respond favorably to a more pleasant environment. 

When physicians perform a procedure in a hospital, even on an outpatient basis, they typically receive only their professional fee. The facility fee (which in many cases exceeds their professional fee) flows entirely to the hospital. In an ASC, physicians can own the facility, allowing them to participate in facility-fee economics. This financial alignment has become a powerful driver of the sector’s growth.⁵

From a capital standpoint, ASCs may be attractive not only to physician groups but increasingly to private equity investors who recognize the combination of recurring procedure volume and cost-advantaged delivery.

Hospitals did not always welcome this trend. When physicians began opening independent ASCs two decades ago, health systems with substantial spare OR capacity preferred to keep as many surgeries as possible in their own facilities.

As physician-led ASC development accelerated, though, hospitals recognized that their resistance was costing them procedures and revenue. Today, many hospitals are in joint ventures with physician groups and sometimes a management company or health system. The hospital retains a share of the facility economics on procedures that might otherwise be diverted elsewhere, while physicians gain an ownership stake. The ASC frequently benefits from the hospital’s existing payer contracts. 

This approach reflects a realignment of incentives and underscores that the migration of procedures to outpatient settings is structural, not cyclical.

Even as the scope of ASC-eligible procedures has expanded, a meaningful gap persists between what is permitted and what is actually being performed in outpatient settings.

Joint replacements illustrate the point. While knee and hip replacements have shifted sharply out of inpatient settings in recent years, most of that outpatient volume is still occurring in hospital outpatient departments rather than ASCs.⁶

A similar dynamic is playing out across other complex procedures. Cardiac procedures, spinal cases and other advanced surgeries also remain concentrated in hospital settings, underscoring how much room remains for outpatient migration.⁶

Clinical selection remains the key constraint. Patients requiring overnight monitoring or those with significant comorbidities will continue to need hospital-based care. But as surgical techniques advance, patient selection criteria sharpen, and physicians accumulate more experience with complex procedures in outpatient settings, ASCs will continue to expand their share of procedures. 

For healthcare providers, health systems and the commercial lenders who finance growth in the sector, ASCs represent one of the clearest structural growth stories in American healthcare. 

“Ten or 15 years ago, hospitals said no—they weren’t going to commit capital to this,” Lieberman says. “But increasingly, they have—and they will continue to do so.”

 

Explore how Capital One’s Healthcare Corporate Finance team helps businesses navigate evolving industry trends.

 

References: 

1. Centers for Medicare & Medicaid Services. (2025, November 21). CY 2026 OPPS and ambulatory surgical center final rule: Hospital price transparency policy changes. https://www.cms.gov/newsroom/fact-sheets/cy-2026-opps-ambulatory-surgical-center-final-rule-hospital-price-transparency-policy-changes

2. Zhao, X., Whaley, C. M., Munnich, E. L., et al. (2025, October 6). Pricing and insurance networks in outpatient surgery markets. The American Journal of Managed Care, 31(10), 571-574. https://www.ajmc.com/view/pricing-and-insurance-networks-in-outpatient-surgery-markets

3. Levinson, Z., Neuman, T., & Hulver, S. (2024, June 14). Five things to know about Medicare site-neutral payment reforms. KFF. https://www.kff.org/medicare/five-things-to-know-about-medicare-site-neutral-payment-reforms/

4. CHESS Health Solutions. (2024, July 2). The economic case for ambulatory surgery centers in value-based care. https://www.chesshealthsolutions.com/2024/07/02/the-economic-case-for-ambulatory-surgery-centers-in-value-based-care/

5. Medicare Payment Advisory Commission. (2025, March). Report to Congress: Medicare payment policy: Chapter 10. Ambulatory surgical center services: Status report. Medpac. https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch10_MedPAC_Report_To_Congress_SEC.pdf

6. UnitedHealth Group. (2025, June). The Successful Shift of Joint Replacement Surgeries from Hospital Inpatient to Outpatient Settings is Saving the Health Care System $6 Billion This Year and Will Save $70 Billion over the Next Decade. https://www.unitedhealthgroup.com/content/dam/UHG/PDF/2025/2025-06-uhg-shifting-joint-replacement-surgeries.pdf