Ambulatory care has long been valued as a lower-cost, more convenient place to deliver services. What’s changing is the ambition attached to it: leaders are no longer asking only whether outpatient settings save money, but whether they can drive growth.
As inpatient economics tighten and CMS reshapes what it will pay for — and where — health systems and independent practices alike are steering capital toward ambulatory on the bet that future margin lives there. But moving the site of care doesn’t automatically move the economics with it.
In a webinar hosted by Becker’s Healthcare, leaders from across ambulatory care and health system operations weighed in on where future margin will come from, how they’re investing across settings and whether the returns are meeting expectations. Panelists included:
- Jeffrey Flynn, administrator and COO, Gramercy Surgery Center (New York City)
- Bryan Tsao, MD, vice president of ambulatory healthcare and experience, and medical director of the access center, Loma Linda (Calif.) University Health
- Jason Zepeda, COO of Northridge (Calif.) Hospital Medical Center, part of CommonSpirit Health
- Greg DeConciliis, PA-C, administrator, Boston Out-Patient Surgical Suites
- Joe Ganley, vice president of government and regulatory affairs, athenahealth.
Below are key takeaways from their conversation.
Note: Quotes have been edited lightly for length and clarity.
Policy is catching up to clinical reality
For years, clinical advances outpaced the rules governing where procedures could be performed, and that gap is closing. Panelists pointed to CMS trimming its inpatient-only list, COVID-era shifts that moved higher-acuity cases like outpatient joints and spine into ambulatory settings, and states easing certificate-of-need rules.
Mr. Flynn offered New York as a case in point. The state only recently cleared its ambulatory surgery centers to perform cardiac procedures that CMS had approved back in 2020. To him, each approval signals care steadily migrating out of big hospitals and closer to patients – and that means operational changes for health systems and ASCs.
“We need to start scaling down because healthcare has to be more into the community directly,” Mr. Flynn said.
The reimbursement squeeze is real, but so is the value case
Payment hasn’t kept pace with the ambulatory shift, and panelists noted the physician fee schedule continues to lag the cost of care. Still, several cautioned against framing this as “ambulatory versus hospitals,” suggesting site neutrality could ultimately align the two rather than pit them against each other.
Mr. Ganley credited CMS with recent efforts to help the payment rule keep pace, but argued the fix has to be durable, with Congress stepping in to make permanent reforms rather than revisiting reimbursement year to year. What matters, he said, is the underlying principle: “If we’re going to have a Medicare program, we’re going to pay what it actually costs to treat patients regardless of setting of care.”
That cost-to-treat lens is where ambulatory’s value case sharpens. Mr. Flynn cited a bariatric sleeve that runs about $95,000 at a nearby hospital versus roughly $27,000 as a bundled case in his center — a differential that, for the appropriate patient, makes the outpatient economics hard to ignore.
Ambulatory is a conduit, not a cost center
In isolation, an outpatient practice can look like a cost center next to inpatient revenue — a framing panelists rejected.
“There’s increasing recognition that this is really the conduit, the front end of a seamless outpatient-to-inpatient-to-post-acute care health system,” Dr. Tsao said. Viewed that way, he noted, the outpatient front end isn’t just a lower-cost site of service. It’s the entry point that feeds downstream elective hospital procedures, themselves a major revenue driver. That, he argued, is why ambulatory has to be evaluated as part of the whole system rather than as a standalone line item.
Making that model work requires moving records cleanly across settings, and Mr. Ganley argued interoperability has outgrown its original obstacle. The technical infrastructure to exchange records securely largely exists, he said; what remains is a business-case problem. Some organizations still treat control of a patient’s data as a way to keep that patient within their own system, reluctant to release records that might send someone to an outside ASC rather than their own hospital. Mr. Ganley’s assertion is that patient expectations for a more distributed model will increasingly force that data to move regardless.
Ambition sets the direction; discipline delivers the margin
The panel was clear that shifting to ambulatory doesn’t guarantee margin. Success depends on standardization, resilient strategy and a clear view of cost.
Mr. Zepeda said his team is building for the long term rather than the current rulebook: “We’re trying to build a strategy that really is resilient against any regulatory policy or anything that comes down from the federal or state government.” The aim, he explained, is to stay agnostic to the current environment — positioned to seize regulatory openings as they surface rather than architecting around whatever rules happen to be in place today.
Mr. DeConciliis cautioned that the higher-acuity cases driving ambulatory growth demand real infrastructure behind them. Moving into outpatient joint replacements, he noted, is what pushed his organization from a 10,000-square-foot site to a 32,000-square-foot facility with bigger ORs, more recovery capacity and expanded sterile processing to match. Add the associated technology, implant and disposable costs, plus the care coordination those cases require — home care, outpatient therapy, contingencies if something goes wrong — and the economics only work if reimbursement keeps pace.
“It’s not something you can just jump into,” Mr. DeConciliis said. “It’s making sure the whole package has been looked at before you go down these roads with different procedures and service lines.”
Where leaders go from here: turning the pivot into payoff
The throughline: ambulatory’s tailwinds are real, but the margin isn’t automatic. The organizations that win will standardize aggressively, use technology and interoperability to strip out administrative burden, and treat outpatient care as the connected front door to a distributed system — not a standalone bet.
As policy and reimbursement pressure accelerate, the leaders moving deliberately, not just quickly, are best positioned to turn the shift into durable margin.
For more insights, you can tune into the full discussion here.
Cost figures outlined in this article reflect the panelists’ personal experiences and have not been independently verified by athenahealth.
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