Podcast Summary

Episode Overview

Podcast: Becker’s Healthcare Podcast
Episode: Healthcare Upside / Down: From ASC to Office - Opportunities, Pressures and Risks
Date: October 28, 2025
Host: Chris Sosin (A)
Guests:

• Kayla Schnee, Weiss Keane, ASC Administrator at Mann Eye Institute (C)
• Kevin Dowdy, Associate Principal at ECG Management Consultants (B)

This episode explores the evolving landscape of outpatient surgical care, focusing on the migration of cases from Ambulatory Surgery Centers (ASCs) to Office-Based Surgery (OBS) suites. The discussion investigates the financial, operational, and regulatory factors driving this trend, considers the impact on providers and payers, and offers strategic insights for stakeholders navigating these changes.

Key Discussion Points & Insights

1. Guest Backgrounds & Introduction to Topic

• Kayla's experience: 16+ years at Mann Eye Institute, opening three ASCs in Houston and an OBS suite in Austin, providing a comprehensive, operational view of both models. [00:34]
• Kevin's perspective: Extensive experience in managed care contracting, works closely with both providers and payers, offering a payer-centric strategic lens. [01:03]

2. Why Expand into Additional Provider Spaces Now?

• Kayla: "We built a little too fast...but from a surgery center standpoint, we built that one just because our, one of our surgeons wanted to build it...For the Austin office-based surgery suite, that was a more strategic one." [02:09]
• Decision-making driven by strategic fit, financial viability (pro forma analysis), and resource capacity, especially during peak surgical seasons (e.g., cataracts in late year).
• OBS in Austin preferred over ASC due to better financial projections and space optimization.

3. Pressures and Trends in Case Migration

• Kevin: "The ASC industry have touted low cost alternative to the hospital and...the health plan community has heard that loud and clear. Their follow up question is okay, well if the ASC is cheaper than the hospital, what's cheaper than the ASC?" [03:38]
• Noted long-term payer pressure to migrate cases from ASCs to even lower-cost settings like office-based suites or OBLs (Office-Based Labs).
• Anticipation of regulatory/Medicare changes pushing cases from hospitals and ASCs into offices.

4. Collaboration, Complementation, and Site of Service Optimization

• Kayla: Emphasizes collaboration: "If the ASCs and hospitals work together, they complement each other because it allows the hospitals to take on those more acuity cases...Same thing now with the OBS..." [04:42]
• OBS doesn’t cannibalize ASC volume if managed correctly—frees up ASC for higher-acuity cases.
• Why still timely? Providers, especially physicians, continue seeking optimal space utilization and cost efficiency as surgical volumes rise and technology advances.

5. Who is Driving the Trend?

• Kayla: "Physicians are advocating for this...If you're at capacity in your ASC, the OBS makes sense." [05:52]
• Payers are watching, but for now, most migration is physician-driven.

6. Misconceptions and Leadership Perspectives

• Kevin: "We...need to be mindful of, there's pressure being pushed down on us which could lead to again moving cases out of the ASC and into the office space, which...puts more control within the physician-patient relationship." [07:53]
• Leadership must recognize payers are moving from ASC promotion to potential commoditization and downward rate pressure.

7. Specialties Migrating from Hospital to ASC to OBS

• Ortho, hand surgery, ophthalmology, gastro, gynecology, urology, ENT, cardiology, plastics, and pain highlighted.
• Most require a class B OBS (IV sedation), but ophthalmology can use class A (no IV sedation). [08:53]

8. Stakeholder Motivations and the Role of Data

• Kayla: "Physician stakeholders are driving the trend. I'm not seeing the payers...I think they're waiting to get more data, quite honestly." [09:40]
• Some payers are hesitating or limiting OBS suite reimbursement, pending more robust data.
• Kevin: "Health plans...their direction...is a commoditization of the ASC space...They just want what is cheaper for me." [10:15]

9. Cost, Space, and Operational Differences: ASC vs. OBS

• Construction cost:
  • OBS: ~$460,000 (1971 sq ft)
  • ASC: ~$4.8 million (7417 sq ft)
  • “It's a huge difference.” [15:55]
• Labor & operating cost:
  • "Labor cost per eye—OBS: $222; ASC: $345...ASC is pretty much 55% more expensive." [20:51]
  • EMR costs lower for OBS; break-even volumes much lower (OBS: 55 monthly cases; ASC: 161).
  • Contribution margin lower for OBS but costs offset the difference.

Quote:

• Kayla: "From a cost standpoint, if you're building the class A OBS, you don't need an RN in there...So, from a labor cost standpoint, our class A OBS is roughly $222 per eye labor, our ASC is $345...ASC is pretty much 55% more expensive." [20:51]

10. State Regulation and Certificate of Need (CON) Issues

• Barriers lower for OBS, especially in non-CON states like Texas.
• Kevin: "If there isn't a CON requirement for an office-based suite and the barrier to entry is lower in a particular state, it could be a good opportunity..." [17:29]
• Cannibalization risk if physician-owned ASCs build competing OBSs.

11. Payer Perceptions & Transparency

• ASC as “low-cost alternative” is a double-edged sword—pushes payers to keep squeezing rates.
• Public payer transparency files: hospitals often reimbursed much more than ASCs for the same procedure; even more dramatic than ASC to office transition. [25:37]
• Use of these data in negotiations to highlight discrepancies.

12. Upsides and Downsides of OBS Trend

Upsides:

• Lower cost, efficient use of staff and space, greater patient and physician control, potential for more cases.
• OBS suits well for healthy, lower-risk or cosmetic patients, sometimes reduces or eliminates facility fees.
  Downsides:
• Potential for payer resistance or lower reimbursement, risk of cannibalizing ASC business, administrative burdens with data/reporting, the need for careful strategic planning to avoid self-competition.

Quote:

• Kayla: "Just to be clear, I'm for ASCs...It's not better, but it provides different options for people who need those options." [23:25]
• Kevin: "ASCs may not be the silver bullet to fix everything...but it's one of the levers that must be pulled." [24:10]

13. Industry Messaging: “Low Cost” vs. “High Efficiency”

• Kevin’s Pearl of Wisdom:
  • Industry should “pivot off of low cost to high efficiency” messaging.
  • "Health plans have heard, they think of ASCs as Walmart and they're working to commoditize the ASC space...We shouldn't just walk around saying we're the low cost alternative." [28:15]
• Emphasis should be on quality, efficiency, and keeping decision-making with physicians/patients.

Notable Quotes & Memorable Moments

• Kayla Schnee:

  • "If you can prove to your payer that [an OBS] is going to save them cost, which we have done, they are more willing to give you reimbursement for it." [11:45]
  • "Our OBS cost over $460,000...Our ASC cost over $4.8 million. So that's a...huge difference." [15:53]
  • "From a labor cost standpoint, our class A OBS is roughly $222 per eye labor. Our ASC is $345 an eye...ASC is pretty much 55% more expensive." [20:51]
  • "I'm for ASCs...It provides different options for people who need those options." [23:25]

• Kevin Dowdy:

  • "We need to pivot off of low cost to high efficiency. The health plans have heard, they think of ASCs as Walmart and they're working to commoditize the ASC space." [28:15]
  • "Hospitals where the case is being performed today, $78,000...health plan just offered...the surgery center...$20,000. You could save $50,000 on one case by moving it to the ASC." [25:37]

Timestamps for Important Segments

• 00:34 — Guest backgrounds & experience
• 02:09 — Rationale for new ASC/OBS builds
• 03:38 — Payer pressures and migration trends
• 04:42 — ASCs and hospitals as complements; technology and case migration dynamics
• 06:35 — Misconceptions about site of service; optimization drivers
• 08:53 — Specialties moving into ASCs/OBSs
• 15:53 — Cost and facility comparison: OBS vs. ASC
• 20:51 — Labor cost per case detailed breakdown
• 23:25 — Pros and cons of ASCs vs. OBSs; clarity on advocacy
• 25:37 — Data transparency and striking payer price differentials
• 28:15 — Kevin’s pearl: Messaging shift and industry positioning

Final Takeaways

• The migration from hospitals to ASC and now into office-based suites is driven by cost, technology, patient demand, and increasingly by payer push.
• While OBS offers significant cost and efficiency benefits, strategic planning is essential to avoid cannibalization and ensure sustainable reimbursement.
• Messaging in the ASC industry must evolve toward “efficiency and quality,” resisting commoditization and preserving value in the evolving outpatient surgical market.