Hospital Outpatient Units vs. ASCs: Why the Same Procedure Costs So Much More

A 2025 Health Affairs study found that commercial insurers pay an average of $1,489 (78%) more for the same outpatient procedures when performed in hospital outpatient departments (HOPDs) instead of ambulatory surgical centers (ASCs). The difference isn’t about outcomes — it’s about billing structures and negotiating power. For most orthopedic and sports procedures, ASCs deliver the same quality care at far lower cost and with greater efficiency.

Top 3 Reasons for the Differential

  • Facility Fees: The average commercial price for a hospital outpatient procedure was $3,060–$3,572, compared with just $1,660–$2,011 in ASCs. These higher “facility fees” account for most of the $1,489 price gap.

  • Negotiated Rates: Large hospital systems leverage market power to secure higher reimbursement, while selective contracting (like Cigna’s narrow ASC-focused network) can reduce costs by over $1,000 per procedure.

  • Case Complexity Claims: Hospitals justify higher prices by citing more complex patients, but for routine orthopedic and pain procedures, the case mix and outcomes are nearly identical across sites.

📊 Source: Maughan MP, Ryan AM, Whaley CM, Radhakrishnan N. Health Affairs. 2025;44(10):1291–1297. doi:10.1377/hlthaff.2025.00297.

The Hidden Financial Advantage of Nonprofit Hospitals


Most people assume nonprofit hospitals succeed by delivering better care or efficiency, but a major part of their financial strength comes from tax arbitrage.

Unlike private practices, nonprofit hospitals can borrow money through tax-exempt bonds, meaning investors accept lower interest rates because their returns are tax-free. This lets hospitals raise billions at very low cost.

At the same time, these hospitals hold massive investment portfolios that earn untaxed returns. When they pay 2% on borrowed money but earn 6% on investments, that 4% spread is pure profit - a form of indirect tax arbitrage that doesn’t depend on patient care or operations.

This financial advantage fuels expansion and acquisition, leaving independent physicians competing on an uneven playing field. The system rewards financial structure, not clinical value - and it’s perfectly legal.

Read the full article here: https://www.fiercehealthcare.com/providers/large-nonprofit-hospitals-taking-full-advantage-low-interest-debt-untaxed-investments?utm_medium=email&utm_source=nl&utm_campaign=HC-NL-FierceHealthcare&oly_enc_id=9328C1537789G6D

How Employers Save Money: Fully Insured vs. Self-Insured Models — and the Role of MSK Bundles

In the setting of rising healthcare costs employers are looking for ways to save money. One proposed cost saving technique is to enroll in musculoskeletal bundles. This brief review compares a fully insured model vs. a musculoskeletal bundle.

 Fully Insured Model: Predictable but Expensive

Let’s consider a company with 1,000 employees:

  • Average premium: $600 per month, per employee

  • Annual premium cost: $7.2 million

  • Actual claims generated: $5 million

  • Insurer overhead, reserves, and profit: ~$2.2 million

In this setup, the employer pays a fixed premium. The insurance company takes on the claims risk, pays providers directly, and keeps the difference if claims are lower than expected. If claims rise, premiums are adjusted upward the following year.

Employers gain predictability but often pay significantly more overall due to insurer margins and lack of cost transparency.

 Self-Insured Model: More Control, More Savings

Now, let’s look at the same company under a self-insured model:

  • Employer directly funds claims: $5 million

  • Third-party administrator (TPA) fee: $500,000

  • Stop-loss insurance (to protect against catastrophic claims): $500,000

  • Total annual cost = $6 million

Compared with the fully insured plan, the employer saves $1.2 million per year.

Employers assume more responsibility for claims, but they also gain data transparency, customization options, and flexibility in contracting with providers.

 MSK Bundles: A Game-Changer for Employers

One of the most expensive and predictable categories of care is musculoskeletal (MSK) procedures, such as knee and hip replacements. These are ideal for bundled payments.

  • Traditional fee-for-service:

    • Knee replacement: $50,000+ (variable, depending on complications and readmissions)

  • Bundled payment:

    • Knee replacement: $28,000 flat fee

    • Covers surgery, anesthesia, hospital stay, post-op care, and 90-day follow-up

If the company has 30 knee replacements annually:

  • Traditional model = ~$1.5 million

  • Bundled model = ~$840,000

  • Savings = ~$660,000 per year

Research supports these savings. A major JAMA study showed that bundled payments for lower extremity joint replacement episodes reduced Medicare spending without compromising quality outcomes.¹

 Why This Matters for Employers

  • Cost predictability: Bundles cap exposure to runaway bills.

  • Quality assurance: Bundles are usually tied to “centers of excellence” with lower complication rates.

  • Employee satisfaction: Lower or waived out-of-pocket costs improve benefits and retention.

  • Direct contracting power: Self-insured employers can bypass insurer markups and negotiate directly with providers.

 Conclusion

A company paying $7.2 million in premiums under a fully insured model could save over $1 million annually by self-insuring — and an additional $600,000 or more by adopting MSK bundles. For employers, this is not just an accounting exercise. It’s a chance to lower healthcare costs, improve outcomes, and strengthen the employee experience.

 Reference

  1. Dummit LA, Kahvecioglu D, Marrufo G, et al. Association Between Hospital Participation in a Medicare Bundled Payment Initiative and Payments and Quality Outcomes for Lower Extremity Joint Replacement Episodes. JAMA. 2016;316(12):1267–1278. doi:10.1001/jama.2016.12717