Ambulatory Surgery Centers Have Cost Advantage Over Hospital Care

Kathleen Carey, Ph.D. Professor Department of Health Law, Policy and Management Boston University School of Public Health Boston MA Interview with:
Kathleen Carey, Ph.D.
Department of Health Law, Policy and Management
Boston University School of Public Health
Boston MA  02118

Medical Research: What is the background for this study?

Dr. Carey: Ambulatory surgery centers (ASCs) are a growing alternative to hospital outpatient departments (HOPDs) for patients undergoing surgeries that do not require an overnight stay. The number of ASCs increased 49% between 2002 and 2012 and now exceeds the number of acute care hospitals.

Most Ambulatory surgery centers are specialized in the areas of gastroenterology, ophthalmology or orthopedic surgery. Because of specialization and limitations on the services they provide, it generally is assumed that ASCs can perform the same procedures at a lower cost than HOPDs. In fact, Medicare reimburses ASCs at a rate of roughly 60% of what they reimburse HOPDs. Yet since Medicare doesn’t require ASCs to submit cost reports, this policy is based on little information about the relative costs of ASCs and HOPDs.

The cost advantage may offer an explanation for rapid ASC growth. But financial margins are explained by both costs and revenues, and high returns on investment might also be explained by high prices. Here there is even less information, as prices negotiated between commercial health insurers and providers are ordinarily considered highly confidential. In this study, I took advantage of MarketScan Commercial Claims and Encounters, a large national database distributed by Truven Health Analytics that contains information on actual prices paid to ASCs and HOPDs to explore the revenue side of ASC expansion.

Medical Research: What are the main findings?

Dr. Carey: For this study, I examined six common surgical procedures that are high volume, provided in both ASCs and in HOPDs, and represent the three main ASC specialties: colonoscopy, upper GI endoscopy, cataract surgery, post cataract surgery (capsulotomy), and two knee arthroscopy procedures. Over the period 2007-2012, the ratio of what insurers paid ASCs compared to HOPDs differed considerably across specialty: For colonoscopy and endoscopy, ASCs received 22% less than HOPDS. But for cataract surgery, the payments were relatively comparable, and for knee arthroscopy payments to ASCs exceeded payments to HOPDs by 28% to 30%. Private insurers paid ASCs considerably more than Medicare did – anywhere from 25% more to over twice as much for post cataract surgery.

The other interesting finding was that HOPD prices grew much faster than ASC prices between 2007 and 2012. While some  Ambulatory surgery centers prices grew more than others, ASC prices on the whole rose roughly in line with medical care prices generally. HOPD prices for these services, however, rose from 32% to 76% during the same time period.

Medical Research: What should clinicians and patients take away from your report?

Dr. Carey: When advising patients where to receive common surgeries, clinicians should be cognizant of cost differences to the medical system. If the perceived quality is the same and it is convenient for the patient,  Ambulatory surgery centers do have a cost advantage over hospital outpatient departments. However, patients should not assume that their insurers are paying less for these procedures when performed in an ASC, and should when possible, take note of the increasing opportunities for transparency around their share of the payment. The Surgery Center of Oklahoma, for example, has for several years been posting the full price of common surgical procedures on their website.

Medical Research: What recommendations do you have for future research as a result of this study?

Dr. Carey: There is a growing availability of commercial insurance claims databases which contain information on actual transacted prices. These are much more relevant to growing health care spending than the charge data that has been available in the past. Researchers should make use of these data to understand the variation and trends in health care spending across the U.S. Since the future of health care financing depends on spending control and affordability, sustainability of the ACA depends on it.


Price Increases Were Much Lower In Ambulatory Surgery Centers Than Hospital Outpatient Departments In 2007–12

By Kathleen Carey, Ph.D.

Professor, Boston University School of Public Health
Health Affairs  October, 2015 34(10):1738-1744

[wysija_form id=”5″]


Kathleen Carey, Ph.D (2015). Ambulatory Surgery Centers Have Cost Advantage Over Hospital Care 

Last Updated on October 12, 2015 by Marie Benz MD FAAD