Specialization as an Organizing Principle: The Case of Ambulatory Surgery Centers

Ambulatory surgery centers (ASCs) recently have grown to become the dominant provider of specific surgical procedures in the United States. While the majority of ASCs focus primarily on a single specialty, many have diversified to offer a wide range of surgical specialties. We exploited a unique data set from Pennsylvania for the years 2004 to 2014 to conduct an empirical investigation of the relative cost of production in ASCs over varying degrees of specialization. We found that for the majority of ASCs, focus on a specialty was associated with lower facility costs. In addition, ASCs appeared to be capturing economies of scale over a broad range of service volume. In contrast to studies of cost efficiency in specialty hospitals, our results provide evidence that supports the focused factory model of production in the ASC sector.