Ambulatory Surgery Centers Saved $38 Billion in Private Health Spending

Doctors Moving a PatientNew research from the Healthcare Bluebook (sponsored by the Ambulatory Surgery Center Association) indicates the privately insured population saved $38 billion by using Ambulatory Surgery Centers (ASCs) instead of hospital outpatient departments for day surgeries. That figure includes $5 billion of lower out-of-pocket costs paid by patients directly.

What is remarkable is that only 48 percent of procedures (such as joint replacement) that can currently be done in either setting are actually done in ASCs. Assuming it would not be appropriate for three percent of surgeries to be done at ASCs (due to complexity), the study estimates shifting the balance of procedures to ASCs would save yet another $38 billion. Plus, shifting other procedures, not currently done at ASCs, would save another $56 billion.

Why are private insurers and employers leaving this money on the table? The study points out hospitals are concentrated and have stronger bargaining power over payers than ASCs do. So, why do not more ASCs open up? Because ASCs are often owned by physicians, laws discriminate against them versus non-profit hospitals. Although federal laws do not discriminate against ASCs as badly as they do physician-owned hospitals, laws in some states prevent new ASCs from entering markets to compete against hospitals. (See this New Jersey law, for example.)

Nevertheless, insurers and employers should be able to do a better job of getting rates down. The California Public Employees Retirement System (CalPERS) reduced costs of joint replacement, cataract surgery, and arthroscopy by $6.4 million in two years by implementing “reference pricing,” whereby high-quality settings with a wide range of fees were paid the same reference price (based on the low-cost providers’ fees). If patients wanted higher-cost facilities, they paid the difference out of pocket.

CalPERS’ reference pricing started in 2008. How can it not be the norm today? Evidence continues to build that health insurance does not add value, as it is currently designed in the U.S.

Comments (3)

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  1. bob hertz says:

    Thanks for the reporting on a positive trend.

    Two cautions, however:

    We have been removing procedures from the hospital setting for over 20 years, but hospitals are still an enormous financial drain on the health system, public, and private insurance.
    Hospitals have had the ability to raise their prices for the services that remain with them.


    The CalPers data on savings from reference pricing are positive but a little discouraging too. If Calpers saved $20,000 on each surgery, and the total savings was $6.4 million, then that is only 300 patients in 2 years. Very skimpy for an enormous health plan!

    • Thank you for doing that math. We do not know how may procedures were done in total for CALPERS’ retirees over the two years. However, I suppose it would be more than 300.

  2. Ron Greiner says:

    John says, “Evidence continues to build that health insurance does not add value…”

    ASC will not do surgery unless you pay cash or have health insurance. There is no VALUE in no surgery John.

    Health insurance has saved millions of lives in the USA.