In-Network Sites Offer Biggest Outpatient Surgery Savings for Patients: Xiaoxi Zhao, PhD

Xiaoxi Zhao, PhD, continues her conversation with The American Journal of Managed Care® by expanding on findings from her October 2025 study, "Pricing and Insurance Networks in Outpatient Surgery Markets."

She explains that out-of-network ambulatory surgery centers (ASCs) often cost less than in-network hospital outpatient departments (HOPDs) due to lower overhead and limited bargaining power, but patients tend to save more at in-network sites. Zhao emphasizes that improved transparency could help patients make more cost-conscious choices.

Watch part 1 for an overview of the study's background and key findings.

Transcript

Your study found that out-of-network ASCs often cost less than in-network HOPDs. Why do you think this occurs?

I think it really comes down to 2 things. The first one is the cost structure, because ASCs are more specialized in routine procedures and relatively low-complexity procedures. Because ASCs are more focused, they can have linear staffing and don't need to carry the large overhead cost that a hospital may need to carry.

The second thing is, when you think about prices, it's always related to market power. Large hospital systems always have a larger bargaining power. During the price negotiation against the insurance companies, they could leverage their base rate, even if they are in-network.

For ASCs, especially independent ASCs, they have very little bargaining power. During the price negotiation process, they may have to lower their rates, which leads to a tighter margin for them.

Can you explain why insurers save more with ASC usage, while patients save more by using in-network facilities?

This is a question that my colleagues and I are also thinking about right now. I think the most straightforward explanation is that it is how the current plan design, or benefit design, is.

Also, I think, from a patient's perspective, it's harder for them to identify whether they are going to an ASC or HOPD, especially an off-campus HOPD. They may not be able to choose among them and may be less aware of the price difference between the 2 different sites.

I think there's an information gap. The information gap is something that is relatively cheap to fill, and I think that could help a lot of patients understand the price difference between the 2 sites. It helps lead people to make a better choice, from their perspective.