An ownership stake in an ASC can be the most valuable asset in a gastroenterology group – or an eight-figure mistake. The difference is in the numbers you run before you sign.
Key Takeaways
- ASC facility payments run roughly 52 to 58 percent of OPPS rates for GI endoscopy under the 2026 CMS final rule, meaning an ASC captures a larger share of the Medicare dollar than the physician component alone.
- CMS finalized a 2.6 percent facility rate increase for ASCs meeting quality reporting requirements in CY 2026, partially offset by practice-expense methodology changes that cut physician payments for facility-based endoscopy by an average of 8 percent.
- The site-of-service differential between office-based and ASC-based physician payment is now significant: CMS proposals would raise office-based endoscopy physician pay by an average of 16 percent while cutting ASC-based physician pay, a structural incentive to build or expand office endoscopy suites.
- Before committing capital to an ASC, model the proforma under at least three payer-mix scenarios: commercial-heavy, Medicare-heavy, and mixed – because the facility rate spread between commercial and Medicare makes payer mix the largest variable in the return.
For a GI group producing strong endoscopy volume, ownership of an ambulatory surgery center has historically been one of the clearest paths to building practice equity. The physician component of a colonoscopy covers the clinical work. The facility component – the room, the equipment, the staff, the supplies – belongs to whoever owns the building. When that is a hospital, the hospital keeps it. When that is your group, your group keeps it. That arithmetic has driven a generation of GI practice investment in ASC development and acquisition.
The arithmetic is still real in 2026, but the regulatory environment has shifted enough that the proforma you built in 2021 should not be the one you rely on today. CMS finalized a 2.6 percent payment increase for ASCs meeting quality reporting requirements in the CY 2026 OPPS/ASC final rule. That is the headline number. Buried underneath it is a practice-expense methodology revision that cuts physician payments for facility-based endoscopy by an average of 8 percent compared to 2025 rates, according to ACG analysis. For a colonoscopy with biopsy (45385) performed in an ASC, the physician component falls by roughly $14.65 per procedure compared to 2025. The facility payment rises; the professional payment falls. Both sides of that equation belong in your model.
The site-of-service picture has also sharpened in a way that changes the investment calculus. CMS proposals that carried into the 2026 final rule raise office-based endoscopy physician reimbursement by an average of 16 percent over 2025 rates, while cutting facility-based physician payments. That is a structural incentive the agency is building into the payment system, rewarding lower-cost care settings. For GI groups evaluating capital allocation, it means an office-based endoscopy suite deserves a proforma alongside the ASC model – and the comparison may surprise you.
How the Facility Rate Structure Actually Works
Medicare sets ASC payment rates as a percentage of hospital outpatient department (HOPD) rates for the same procedure. For GI endoscopy, that relationship runs roughly 52 to 58 percent of the HOPD rate, per the CY 2026 rate structure. That discount is why hospitals have fought hard over the decades to keep endoscopy in their outpatient departments rather than lose volume to physician-owned ASCs.
MedPAC’s March 2026 report on ASC services noted that Medicare payments for ASC services have generally been set well below HOPD rates, and that the gap creates a consistent access and referral tension. For GI owners, the relevant insight from MedPAC is that ASC margins depend heavily on procedure mix and commercial payer negotiation, because Medicare’s ASC facility rate, while better than nothing, is not the number that makes an endoscopy center profitable. Commercial rates – typically negotiated as a multiple of Medicare or as a percentage of charges – are where the center either works or does not.
The Medicare ASC rate tells you the floor. The commercial rate tells you whether you actually have a business. Model both before you pour the concrete.
The Proforma Variables That Matter Most
A well-constructed endoscopy center proforma has five variables that dominate the output and three that people spend too much time on. The ones that matter:
- Payer mix at the procedure level. Not your practice payer mix – your endoscopy-specific payer mix. Colonoscopy volume skews older, which means higher Medicare share than your E/M practice. Model Medicare and commercial separately, because the facility rate spread between them can be two to four times.
- Procedure volume and room utilization. An endoscopy center is a fixed-cost business. Staffing, facility lease, equipment financing, and supply overhead run whether the rooms are full or empty. Breakeven typically requires consistent daily utilization across operating days; model the volume you can commit from your current practice, not the volume you hope to attract.
- Physician ownership structure and call on case flow. A center where physician-owners are required to send a defined case volume is a different investment than one where the referral is voluntary. Get the commitment language right before the operating agreement is signed.
- Anesthesia arrangement. Whether anesthesia is employed, independent contract, or CRNA-based materially affects cost structure and payer contracting dynamics. The anesthesia model also affects patient cost-sharing calculations, which in turn affects scheduling and cancellation rates.
- Commercial contract terms. Specifically, whether the payer pays the ASC rate plus a separate anesthesia allowance or bundles them, and how the rate escalates over contract term. Contracts signed before 2022 may have escalation clauses that are below current inflation; renegotiating them is the single highest-yield action in many existing centers.
Build vs. Buy: The Decision That Often Gets Made Backward
Groups that pursue greenfield ASC development typically focus on the development cost – construction, CON process where applicable, equipment, licensure – and underestimate the time cost. A new ASC from site selection to first case routinely runs 24 to 36 months in states without certificate-of-need requirements and longer where CON applies. During that window, your capital is committed and your competitor may be negotiating the commercial contracts you need.
Acquisition of an existing center solves the time problem and introduces a valuation problem. Endoscopy centers trade on EBITDA multiples that have compressed from the peak levels of 2021 and 2022 but remain elevated relative to historical norms, driven by private equity platform demand. A group acquiring a center that a PE-backed platform also wants will pay a market price set by that competition. The question is not whether the center is worth it in isolation – it is whether the synergies your group specifically brings justify that premium over a greenfield proforma.
From the Field
A five-physician GI group in the Mid-Atlantic had been offered an ownership stake in a three-room endoscopy center that a retiring solo gastroenterologist was selling. The asking price was based on a trailing EBITDA multiple that the seller’s broker described as conservative. Before the group committed, our fractional CFO engagement rebuilt the proforma from the center’s actual payer-contract terms and prior three years of procedure logs rather than from broker-supplied summaries. Two findings changed the deal: the center’s largest commercial contract had an escalation clause that was well below CPI and expired in eighteen months, and anesthesia was provided by an independent group on a handshake arrangement with no written rate commitment. We modeled the contract renewal at market and the anesthesia formalization cost, and the EBITDA recalculated at roughly 30 percent below the seller’s figure. The group went back with a revised offer, negotiated a price adjustment, and added a contract-renewal contingency. The center has since been profitable on the adjusted basis we modeled.
The Execution Gap Between Analysis and Operations
An endoscopy center proforma is a spreadsheet. Running a center profitably is a different skill set: scheduling block management, supply chain discipline, anesthesia coordination, payer contract tracking, and monthly financial review against the original model. Most GI physician groups have none of that infrastructure at the time of acquisition or opening. The center either hires an administrator with that experience – a real cost that should be in the proforma – or it runs on hope for the first two years.
A consultant can build the proforma, run the due diligence, and advise on the operating structure. If your group has a strong administrator or a partner willing to take on the operational oversight, that is often the right and more economical scope. A fractional executive goes further: working inside the center’s systems alongside the administrator, managing the monthly financial review, leading the payer contract renegotiation, and tracking the volume metrics that predict whether the year will close in the black. The label “fractional executive” is unregulated, and some advisory firms use it to describe what is ordinary consulting. Before you engage anyone in that role, ask specifically whether they will be working in your systems with your staff – not delivering to you and leaving execution on your desk.
The endoscopy center can be the most durable asset a GI group builds. It can also be the one that consumes capital and goodwill for years before anyone admits the proforma was wrong. The difference, in most cases, comes down to whether someone is watching the operational numbers monthly and making adjustments before the variance becomes a write-down.
Sources
- CMS, CY 2026 Hospital Outpatient Prospective Payment System and ASC Payment System Final Rule — https://www.cms.gov/medicare/payment/prospective-payment-systems/ambulatory-surgical-center-asc/asc-payment-rates-addenda
- American Gastroenterological Association, CMS Finalizes Payment Policies for 2026 (November 2025) — https://gastro.org/news/cms-finalizes-payment-policies-for-2026/
- MedPAC, Ambulatory Surgical Center Services: Status Report, March 2026 Report to Congress, Chapter 11 — https://www.medpac.gov/wp-content/uploads/2026/03/Mar26_Ch11_MedPAC_Report_To_Congress_SEC.pdf
- American College of Gastroenterology, Significant Impacts to GI in Medicare Physician Fee Schedule Proposed Rule (July 2025) — https://gi.org/2025/07/29/significant-impacts-to-gi-in-medicare-physician-fee-schedule-proposed-rule/
More in the Gastroenterology Series
- Screening Colonoscopy: Coverage Rules, Cost-Sharing Traps, and Scheduling Capacity — how coverage rules and scheduling design determine whether your colonoscopy capacity is actually being used.
- GI Ancillary Services: Pathology, Anesthesia, and Infusion – What Works and What Gets You Audited — how to structure pathology, anesthesia, and infusion revenue without creating compliance exposure.
- Advanced Practice Providers in Gastroenterology: Deploying NPs and PAs Without Losing Money — how to build an APP model in GI that actually covers its own cost and expands physician capacity.
- GI Payer Contracting and Evaluating Consolidation Offers: A Decision Framework for Independent Practices — how to negotiate GI payer contracts from a position of strength and evaluate consolidation offers with clear financial criteria.