Ambulatory care remains an essential growth platform, but attractive demand no longer guarantees durable returns. The winning model is shifting from adding locations to designing integrated networks—service by service, market by market, with disciplined capital allocation and accountable execution.
Executive Summary
Healthcare continues to move toward outpatient settings, yet the economics beneath that migration are becoming more demanding. Reimbursement differences are receiving greater scrutiny; payers and patients are more sensitive to site of service; labor, construction, technology, and integration costs remain substantial; and physician alignment increasingly determines whether an asset can achieve scale.
The practical question is no longer whether ambulatory care will grow. It is which markets, services, sites, structures, and operating models will convert that growth into durable enterprise value. This article presents a six-dimension investment framework, compares development and partnership models, distinguishes facility economics from network value, and proposes a portfolio approach for deciding what to build, acquire, partner, optimize, or exit.
The outpatient migration thesis is no longer enough
Ambulatory care is still one of healthcare's clearest long-term growth arenas. Patients prefer convenient access; many procedures and treatments can be delivered safely outside an inpatient hospital; physicians value efficient settings; and payers continue to seek lower-cost alternatives. Medicare data show that the number of certified ambulatory surgery centers reached 6,436 in 2024, up 2.2% from 2023, while ASC service volume per 1,000 fee-for-service Part B beneficiaries increased 3.4%.
But growing demand and growing supply do not establish that every ambulatory investment will earn an attractive return. A location can fill and still disappoint financially. A facility can meet its budget and still weaken the network by duplicating fixed costs, cannibalizing a nearby site, or drawing capital away from a higher-value service line. Conversely, an asset with modest stand-alone margin may create real value by enabling physician alignment, protecting referrals, improving access, or establishing a platform in a priority market—provided that value is explicitly defined and measured.
Which ambulatory investments will remain strategically and financially attractive as reimbursement, competition, physician alignment, consumer expectations, capital costs, and operating economics change?
Six forces are changing ambulatory economics
1. Site-of-service economics are converging—selectively, not uniformly
The policy direction is clear enough to require stress testing, but not simple enough to support a blanket assumption. MedPAC has recommended more closely aligning Medicare payment rates across ambulatory settings for selected services. CMS has also adopted targeted policies. For calendar year 2026, CMS expanded its site-neutral methodology for excepted off-campus provider-based departments to include certain drug-administration services. For 2027, CMS has proposed adding certain imaging-without-contrast services; as of this writing, that proposal is not final.
This distinction matters. Site neutrality is not a single switch, and reimbursement still differs by service, payer, ownership, geography, contracting position, and regulatory status. Nevertheless, any investment whose return depends principally on a persistent hospital outpatient payment differential should be evaluated under materially lower-reimbursement cases.
2. Lower-cost sites are becoming more credible competitors
ASCs, physician offices, freestanding imaging and infusion centers, home-based models, and specialized operators continue to expand the set of viable delivery settings. MedPAC describes ASCs as a growing and robust outpatient sector; in 2024, approximately 6,400 ASCs treated 3.4 million fee-for-service Medicare beneficiaries, with program spending and beneficiary cost sharing totaling about $7.5 billion. More supply increases access, but it also makes capacity, differentiation, and physician alignment more consequential.
3. The cost base is less forgiving
Construction, equipment, occupancy, information technology, cybersecurity, clinical labor, and management infrastructure all sit beneath the attractive ambulatory narrative. Staffing is particularly important because physical capacity without clinical capacity has little value. BLS reported that outpatient care center employment grew 2.6% from December 2024 to December 2025, while the broader sector continued to add jobs. Growth increases the need for talent and can intensify local competition for it.
4. Physicians remain the demand engine
Facilities rarely create demand independently. Sustainable volumes generally follow physician capacity, reputation, referral connectivity, clinical program design, and aligned economics. The investment case must therefore address who will practice at the site, how quickly capacity can be recruited or transferred, how governance will work, and whether incentives support the intended service and referral model.
5. Access has become an operating capability
Proximity matters, but a dot on a map is not the same as access. Patients experience access through scheduling, wait times, navigation, referral handoffs, hours, parking, digital tools, financial clarity, and continuity across the network. A distributed footprint without centralized access infrastructure can add complexity faster than convenience.
6. Capital is competing with more alternatives
Every dollar allocated to an ambulatory campus, acquisition, or joint venture competes with digital capabilities, inpatient modernization, workforce investments, technology, research, debt reduction, and other strategic priorities. The relevant benchmark is not only whether a project produces a positive return, but whether it is the best risk-adjusted use of scarce capital and implementation capacity.
A six-dimension ambulatory investment framework
Leadership teams need a common screen that integrates market strategy, service-line economics, physician alignment, finance, operations, and enterprise value. Each opportunity should be scored before a preferred structure is selected.
| Dimension | Questions leadership should answer | Warning signs |
|---|---|---|
| Market attractiveness | Is demand underserved or merely growing? Where do patients originate and leak? What capacity exists and how might competitors respond? | Population growth is used as a proxy for addressable volume; competitive response is absent. |
| Service-line and site fit | Which services are clinically appropriate and economically durable in the proposed setting? What should be HOPD, ASC, office, home, or virtual? | One ownership or reimbursement assumption is applied to every service. |
| Physician and referral alignment | Who supplies clinical capacity? Are recruitment, ownership, governance, succession, productivity, and referral incentives aligned? | The facility opens before the physician model is secured. |
| Financial durability | What are total cost, ramp, working capital, cannibalization, downside reimbursement, and risk-adjusted return? | The base case is precise but sensitivities and implementation costs are thin. |
| Operating scale and integration | Can scheduling, staffing, revenue cycle, pharmacy, lab, imaging, procurement, navigation, and technology be shared? | Sites operate as independent islands and duplicate infrastructure. |
| Strategic value and optionality | Does the asset strengthen a priority market, platform, service line, physician relationship, or future expansion path? | “Strategic” is asserted but not tied to measurable outcomes or decision gates. |
1. Market attractiveness: underserved is different from growing
Population and disease growth are necessary inputs, not conclusions. Demand must be translated into service-specific utilization, payer mix, physician supply, referral flows, competitor capacity, patient origin, and achievable share. A market can grow rapidly and still be unattractive if competitors are overbuilt, recruiting is constrained, or contracting economics are unfavorable.
2. Service-line and site-of-care fit: decide service by service
A multi-specialty campus may combine services with very different economics. Imaging, infusion, surgery, clinic visits, laboratory services, urgent care, and virtual follow-up do not share one optimal site. The strongest network designs place each service where clinical requirements, consumer needs, reimbursement, capital intensity, and operating scale align—not where ownership conventions happen to point.
3. Physician and referral alignment: secure the clinical engine
Employment, acquisition, joint venture ownership, professional services, co-management, and affiliation can all work. What matters is whether the model provides adequate clinical capacity, retains key physicians, supports recruitment and succession, establishes accountable governance, and aligns behavior with the investment thesis. Real estate should follow this clinical model, not precede it.
4. Financial durability: model the downside before approving the upside
The business case should include total capital, working capital, technology, pre-opening costs, integration, recruitment, marketing, ramp losses, and management infrastructure. It should also quantify cannibalization and avoid double-counting downstream contribution. At minimum, leaders should test lower reimbursement, slower physician recruitment, weaker payer mix, delayed opening, higher construction cost, wage pressure, and competitor response.
5. Operating scale and network integration: density beats disconnected breadth
Network density can improve awareness, referral connectivity, staffing flexibility, routing, procurement, and convenience. But density creates value only when the operating system connects the sites. Shared scheduling, navigation, revenue cycle, data, technology, clinical protocols, and performance management are not back-office details; they are the mechanisms through which a footprint becomes a network.
6. Strategic value and optionality: define the claim
Strategic value is legitimate when an asset creates a measurable option: entry into a priority geography, a platform for a specialty service, a stronger physician relationship, protection of a material referral stream, or a path to lower-cost care. It should be expressed as a testable hypothesis with milestones, not as a residual justification for weak economics.
Structure should follow the objective
| Model | Where it can be strongest | Principal tradeoffs |
|---|---|---|
| De novo development | Clear unmet demand, control is valuable, and the organization can recruit and ramp operations. | Slower speed; construction and recruitment risk; early losses. |
| Acquisition | Existing volume, physicians, contracts, and operating capabilities accelerate entry. | Purchase premium, inherited liabilities, integration and cultural risk. |
| Physician affiliation or employment | Clinical capacity and referral alignment are the core constraint. | Compensation sustainability, productivity, governance, retention. |
| Joint venture | Physician or operator capabilities and shared economics improve alignment. | Shared control, governance complexity, compliance and exit provisions. |
| Professional/management services | The parties want operating coordination without full ownership integration. | Incentive design and accountability can be difficult; economics may fragment. |
| Specialized operator partnership | External scale, technology, procurement, or operating expertise materially improves performance. | Dependency, reduced control, contractual rigidity, value sharing. |
| Optimize/convert existing asset | Location is sound but service mix, access, capacity, or cost structure is not. | Legacy constraints; transition disruption; possible sunk-cost bias. |
| Digital or home extension | Selected encounters can be delivered more conveniently without adding a full physical site. | Clinical scope, reimbursement, adoption, logistics, and technology integration. |
No structure is universally superior. The correct choice depends on the strategic objective, missing capabilities, acceptable capital exposure, required speed, physician economics, governance needs, and the organization's ability to integrate and operate the model.
Build the complete business case
An ambulatory business case should reconcile four economic perspectives. Too many proposals stop at facility EBITDA or, at the other extreme, use broad enterprise contribution to excuse a weak local model.
| Perspective | Primary question | Measures to include |
|---|---|---|
| Facility | Can the individual asset operate sustainably? | Volume, net revenue, contribution margin, fixed cost, ramp losses, capital, return. |
| Service line | Does the clinical program create value across its care continuum? | Professional and technical economics, pathway utilization, quality, capacity, ancillary use. |
| Network | Does the asset improve the performance of the connected footprint? | Leakage, referrals, density, access, routing, shared cost, cannibalization, retention. |
| Enterprise | Does the investment advance a priority that justifies its capital and risk? | Market position, physician alignment, strategic options, portfolio return, mission impact. |
The four views should reconcile rather than stack indiscriminately. If a referral is counted as facility revenue, its downstream contribution cannot be counted again as though it were independent. If an acquisition transfers existing volume into the network, that volume should not be treated as entirely incremental. If “strategic value” depends on future service lines, capital and execution requirements for those services belong in the model.
What a defensible case includes
- Patient-origin, demand, leakage, and competitive-capacity analysis
- Service-specific volume, ramp, payer mix, and reimbursement assumptions
- Physician supply, recruitment, productivity, retention, and succession requirements
- Capital expenditures, working capital, pre-opening losses, technology, and integration costs
- Staffing model, operating hours, scheduling, navigation, and shared-service requirements
- Cannibalization, downstream contribution, and network effects—without double counting
- Base, upside, downside, reimbursement, delay, and competitor-response scenarios
- Milestones, accountable owners, decision gates, and options to expand, redesign, partner, repurpose, or exit
Site-neutral pressure should change investment behavior—not end ambulatory investment
The strategic response to site-neutral payment pressure is not to abandon hospital outpatient development or assume that freestanding sites always win. HOPDs may support higher-acuity patients, integrated clinical infrastructure, emergency capabilities, teaching, research, complex pharmacy, and other functions that are not interchangeable with a physician office or ASC. The appropriate comparison must reflect the actual service and patient population.
The practical response is to separate returns that arise from durable operating advantage from those that arise primarily from a payment differential. Projects should be stress-tested for narrower differentials, commercial payer steering, price transparency, changes in patient cost sharing, and migration to alternative settings. Investments supported by real demand, physician capacity, clinical differentiation, efficient operations, and network value are more likely to remain attractive under multiple policy outcomes.
Access is not a real-estate strategy
Convenient locations matter, but the patient journey can still fail at a nearby site. If centralized scheduling cannot see capacity, referrals are incomplete, clinical staffing is unreliable, authorization is slow, or patients cannot understand their financial responsibility, geographic proximity will not produce a consistently better experience.
Executives should therefore evaluate access as an operating system with measurable performance: new-patient lag, referral conversion, appointment availability, scheduling abandonment, provider capacity, utilization by time of day, navigation completion, leakage, patient travel, and experience. A location is one component of that system—not the system itself.
Manage ambulatory investments as a portfolio
Project-by-project approval encourages inconsistent assumptions and obscures interdependencies. A portfolio view enables leaders to compare opportunities using the same strategic, financial, readiness, and risk criteria—and to see where one investment enables or undermines another.
| Portfolio role | Illustrative objective | Decision emphasis |
|---|---|---|
| Strengthen the core | Relieve capacity constraints and improve performance in established markets. | Utilization, access, integration, cannibalization. |
| Expand access and capacity | Bring appropriate care closer to patients and create throughput. | Demand, clinical capacity, scheduling, unit economics. |
| Enter priority markets | Establish a beachhead and create a path to broader service development. | Market attractiveness, physician strategy, sequencing, optionality. |
| Build specialty platforms | Concentrate differentiated expertise and complementary services. | Clinical model, referral reach, scale, capital intensity. |
| Create lower-cost alternatives | Move appropriate care to efficient settings. | Site fit, payer strategy, patient economics, operational reliability. |
| Defend strategic positions | Protect material referral streams, physicians, or geographies. | Threat probability, response options, cost of defense. |
| Optimize or exit | Redesign, consolidate, partner, repurpose, or divest underperforming assets. | Recoverability, network impact, transition risk, alternative use. |
A practical scoring model can weight six dimensions: strategic alignment, financial return, market attractiveness, physician and operating readiness, risk, and portfolio interdependence. Scores should inform judgment, not substitute for it. The greatest value often comes from the discussion created by the scoring: why leaders disagree, which assumptions drive the result, and what evidence would change the decision.
Five actions for the next 90 days
1. Reassess the existing portfolio.
Evaluate every ambulatory asset across facility, service-line, network, and enterprise economics; identify assets that are strategically important but operationally weak, and assets that appear profitable only because costs or cannibalization are omitted.
2. Stress-test the capital plan.
Re-run proposed investments under lower reimbursement, higher capital cost, slower recruitment, delayed opening, and competitor-response scenarios. Identify which assumptions most influence value.
3. Map the clinical demand engine.
Integrate patient origin, referrals, leakage, physician capacity, recruitment needs, payer mix, and competitor supply into one market view.
4. Design the network operating system.
Define how scheduling, navigation, staffing, revenue cycle, technology, data, marketing, and performance management will connect sites.
5. Reprioritize and sequence.
Classify opportunities as build, acquire, partner, optimize, hold, or exit. Allocate capital to a smaller number of initiatives with clear ownership, milestones, and readiness to execute.
The next ambulatory advantage
Ambulatory growth remains essential. What is changing is the standard required to convert growth into value. The next generation of successful strategies will not be defined by the number of locations on a map. It will be defined by deliberate service placement, market density, physician alignment, operating integration, financial durability, and the discipline to invest selectively.
For healthcare leaders, the opportunity is to move from a facilities plan to an enterprise network strategy: one that places care in the right setting, connects assets into a coherent operating model, and earns its capital under more than one reimbursement scenario.
Sources and notes
- Centers for Medicare & Medicaid Services. CY 2026 Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Final Rule fact sheet, November 21, 2025.
- Centers for Medicare & Medicaid Services. CY 2027 OPPS/ASC Proposed Rule fact sheet, July 2, 2026.
- Medicare Payment Advisory Commission. Ambulatory surgical center services: Status report, March 2026.
- Medicare Payment Advisory Commission. Health Care Spending and the Medicare Program, July 2026 Data Book.
- U.S. Bureau of Labor Statistics. Employment data for outpatient care centers, December 2024–December 2025.