(And Why That’s the Wrong Way to Read It)
If you talk to anyone developing surgery centers about what’s hot right now, they’ll probably say “vascular.” A few years ago, it was cardiac; before that, orthopedics had its moment. Wait two more years, and the answer will be something different entirely.
The mistake people make is treating each of these specialties as a separate trend. They’re not — they’re the same mechanism appearing in a different specialty every time Centers for Medicare & Medicaid Services (CMS) adjusts what it will pay for and where.
If you’re developing or investing in ambulatory service center (ASC) real estate, the procedure’s profitability today matters less than understanding how that profitability was created, because that knowledge can help you predict what’s coming next.
How does a specialty become hot?
CMS sets payment rates and also determines which procedures can be performed in an ASC through the ASC Covered Procedures List. A procedure might be clinically routine but still be considered off-limits if CMS hasn’t added it to that list — or if it sits on the separate inpatient-only list that restricts where Medicare will pay for it.
When CMS adds a category of procedures to the ASC list, physicians performing them in a hospital center now have a financial incentive to perform them somewhere they have greater control. And every developer, contractor, and equipment vendor watching that specialty sees a wave of new facility demand crop up practically overnight.
This pattern recurs, and historical data support it more strongly than the “cardiac, then vascular” shorthand suggests.
The sequence, not the simplified version
Cardiac moved first — not vascular — and earlier than most people remember. CMS added pacemaker implants to the ASC-approved procedure list in 2016. Diagnostic catheterization followed in 2019, with 17 diagnostic cath procedures added that year.
Then CMS proposed adding percutaneous coronary intervention (the stent-and-angioplasty procedures that treat blocked coronary arteries) for 2020. At the time, industry analysts estimated that a 25% shift of the existing hospital PCI caseload into ASCs could move more than $3 billion a year in Medicare spending away from hospital cardiology programs. Enter the moment cardiac became the specialty that ASC developers were anticipating.
Peripheral vascular work has a longer — and somewhat messier — history. CMS reimbursement changes in 2008 are widely credited with driving the rapid growth of office-based labs, the in-office cousin of the ASC built around vascular and endovascular procedures. That growth continued for over a decade, largely outside the ASC framework, since most of it occurred in physician offices and OBLs rather than licensed surgery centers.
What’s happening now — the vascular procedures that are popular in ASC development discussions — is a newer, more direct echo of the 2019-2020 wave. CMS is adding interventional vascular codes to the ASC Covered Procedures List (CPL), most recently as part of the 2026 rule, which is a different and more recent regulatory event than the 2008 office-based lab boom.
And effective January 1, 2026, CMS added cardiac catheter ablation, an electrophysiology procedure, to the ASC CPL, removing one of the remaining barriers to ASC-based EP programs. One ASC Review counted at least 26 cardiology-focused ASCs opened or announced in 2024. Another market estimate puts nearly a third of all cardiac procedures happening in ASCs by 2025. Vascular and cardiac are running parallel, each getting a fresh regulatory push in the same 2026 rule cycle.
The 2026 ASC payment rule added between 271 and 302 new procedures to the Covered Procedures List, with a significant share coming from the inpatient-only list (which CMS has committed to phasing out entirely by 2028). This expansion includes vascular embolism and occlusion and many orthopedic and musculoskeletal codes. Instead of choosing one specialty as this year’s “winner,” the agency is running the same playbook across several specialties simultaneously.
The payment gap is widening
The standard version of this story gets the mechanism backward. The instinct is to assume CMS is narrowing the gap between ASC and hospital reimbursement, easing ASCs toward parity. The opposite has been happening.
ASC reimbursement fell from about 85% of hospital outpatient department rates in 2019 to 62% by 2024, and the gap is still widening under current CMS policy. A bipartisan bill introduced in the House in March 2026, the Outpatient Surgery Access Act, wants to stop that slide by aligning future ASC and hospital outpatient department (HOPD) payment updates starting in 2027. Currently, the bill has not yet passed.
This framing matters for how you read reimbursement is driving ASC growth. These surgical centers aren’t being paid more. The dollar gap between what Medicare pays a hospital and what it pays an ASC for the same procedure is large and growing. Moving a procedure into the ASC setting saves money even as ASC rates themselves get squeezed.
ASCs generated nearly $28 billion in Medicare savings between 2019 and 2024 — a number driving CMS’s ongoing willingness to expand the Covered Procedures List while it holds ASC rate growth below hospital rate growth. And the growth in what ASCs are permitted to do, plus the slow erosion of payment amounts per procedure, are happening simultaneously for related but different policy reasons.
There’s a separate site-neutral policy worth mentioning. CMS’s 2026 Medicare Physician Fee Schedule final rule changed how indirect practice expenses are allocated by site of service. Reimbursement for office-based specialties has increased, but it has decreased for hospital-based specialties. The gap is narrowing between independent physician offices and hospital-employed practices, separate from the ASC-versus-HOPD facility fee gap.
Site-neutral reform is real and reshaping incentives, but it’s doing so on a different comparison than the one that explains why vascular and cardiac procedures keep moving into ASCs.
What it means for real estate
The real estate fundamentals under these changes are strong. Medical outpatient building (MOB) occupancy is over 90% nationally. New MOB construction completions are projected to fall another 26% in 2026 to the lowest level in a decade, even as outpatient revenue has grown 45% across the healthcare system since 2021 (nearly three times the 16% growth in inpatient revenue over that same period). ASC rents have climbed more than 8% as ASC lease volume surged 145% between 2022 and 2025 — the steepest rent growth of any outpatient facility type tracked.
For a developer, the lease economics of a cardiology- or vascular-focused ASC differ from those of a typical medical office tenant. These are specialized, often $500-per-SF+ buildouts—that capital outlay benefits landlords. Tenant relocation is expensive enough that long-term net leases (15+ years with built-in escalations) are common, and EBITDAR coverage ratios of 2.0x or better are a common underwriting benchmark.
In 35 states, Certificate of Need laws add another layer of protection for existing facilities by limiting how easily new supply can enter a given market. Suburban sites are absorbing most of the new development because 1) land and construction costs run lower there and 2) retail and flex space conversions are emerging as a faster, cheaper entry point than ground-up construction.
What these changes mean for how you should read the market
The practical takeaway isn’t that you should ignore current profitability. A vascular ASC built today still has to make financial sense on today’s numbers. The takeaway is that current profitability is a lagging indicator rather than a forecast. By the time a specialty is recognized as profitable to build around, the regulatory change that made it profitable happened months (or years) earlier — and the early movers have already secured the best physician relationships and sites.
The leading indicator is the CMS rulemaking itself:
- The annual OPPS/ASC final rule
- Covered Procedures List updates
- Slow-motion phase-out of the inpatient-only list
Reading that document or working with those who track it closely tells you where the next wave may head before the broader market prices it in. That’s a much different skill than asking which specialty is busiest now. And it determines whether you’re building ahead of demand or behind everyone else reading the same headline as you.
When CMS narrows that gap, as it has for some vascular procedures since 2022, the incentive to build new facility capacity for that specialty cools, even though the procedures remain legal to perform there. A specialty can stay clinically viable in the ASC setting long after it isn’t financially compelling to build around. That distinction matters more to a developer than a surgeon.
None of this requires becoming a health policy expert. It requires treating the annual CMS rule changes as the leading indicator they are, rather than waiting for word of mouth among physicians to confirm what happened in the regulatory text months earlier. The developers who get ahead of these cycles don’t necessarily have better intuition about which specialty feels promising. And by chasing last year’s specialty after it’s already crowded with new facilities, they end up competing for the same physicians and the same buildable sites everyone else is eyeing.
They are, however, the ones reading the same public document everyone else can access — just earlier and more carefully. If, however, you’re curious about what might be on the horizon, the 2026 rule changes suggest orthopedics — and a list of other procedures coming off the inpatient-only list — is the next iteration of that story.
Are you a commercial real estate investor or seeking a specific property to meet your company’s needs? We invite you to talk to the professionals at CREA United, an organization of CRE professionals from over 65 firms representing all disciplines within the CRE industry, from brokers to subcontractors, financial services to security systems, interior designers to architects, movers to IT, and more.
