Choosing the Right Site of Care Could Cut Outpatient Surgery Costs in Half: Xiaoxi Zhao, PhD

In part 1 of an interview, Xiaoxi Zhao, PhD, former associate economist at RAND Corporation and lead investigator of "Pricing and Insurance Networks in Outpatient Surgery Markets," published in the October 2025 issue of The American Journal of Managed Care®, discusses the study's motivation and key findings of how both site of care and insurance network status affect outpatient surgery costs.

This transcript has been lightly edited; captions were auto-generated.

Transcript

What motivated you to examine the impact of site of care and insurance network status on outpatient surgery costs?

This study came out, I would say, pretty naturally from 2 well-known observations. The first one is the price difference across sites of care: hospital outpatient departments [HOPDs] and ASCs [ambulatory surgery centers]. On average, for the commercial population, if a procedure is performed at an HOPD, it will cost about 50% more than at an ASC.

On the other hand, there is another instrument that has been widely used to cut the cost; it's the network design. We all know that in-network providers cost much less than out-of-network providers.

We know there are 2 tools, but so far, we don't know how they work together. For example, if I need an arthroscopy, I know that an in-network ASC is the cheapest option, and an out-of-network HOPD is the most expensive one. But what if I'm comparing an out-of-network ASC vs an in-network HOPD? I really don't know which one is more affordable.

That's why we want to better understand the answer to this question, disentangling how much of the cost variation comes from the site of care vs how much of it comes from the network status. Also, what does it mean for patients and their out-of-pocket costs?

What were the main findings? Were there any that surprised you?

Our main findings: first, we studied the price, which is called the allowed amount. We could rank the 4 options from the least costly to the most expensive. So, it's in-network ASCs, out-of-network ASCs, in-network HOPDs, and out-of-network HOPDs.

In terms of price, it's not a big surprise, but an interesting finding is that an out-of-network ASC is cheaper than an in-network HOPD. What, really, I think, is more interesting is when we split the price by insurance payment vs patient payment, we found that patients save more by choosing an in-network provider, regardless of the site of care, while insurers save more by using ASCs rather than HOPDs, regardless of the network status.

For insurance payment, out-of-network ASCs are still more expensive than in-network ASCs, so insurers pay about 30% more at out-of-network ASCs than at in-network ASCs. But if you compare ASCs vs HOPDs, regardless of the network status, if the procedure is performed at an HOPD, insurance will pay 110% more compared with an in-network ASC. That's a lot of money; it is kind of double the price.

For a patient, the patient paid more for out-of-pocket providers, no matter whether it is an ASC or HOPD. I think the patient will also pay about 100% more, also double the price, for an out-of-network HOPD. Our reference group is always the in-network ASC, to be clear.