Margins at surgery centers are under pressure. Reimbursements are tightening, staffing costs are rising, and numbers that once looked strong on a P&L are now hiding real operational inefficiencies just beneath the surface.

For healthcare executives, understanding what your margins actually represent—and where they’re quietly eroding—is more important than ever. The truth is, most centers don’t lose money on the procedure itself. They lose it before the case even starts.

Here’s how to go beyond the bill and look deeper into what your margins are telling you—and how to protect them.

1. Margins Start Before the Incision

Your average reimbursement for an orthopedic procedure might be $4,500. But how much of that are you really keeping?

• A denied insurance authorization can wipe out the entire profit.
• A same-day cancellation leaves the room idle and your team underutilized.
• A delay at the start of the day can ripple through the schedule, shrinking your total daily revenue potential.

In short: margin erosion begins well before the patient enters the operating room. And if you’re only looking at procedure-level costs and collections, you’re missing where the real leakage happens.

2. Denials and Cancellations Are Margin Killers

Let’s break down two quiet killers:

• Authorization Denials: Every time an insurance claim is denied after the fact, your billing team loses hours chasing appeals—and you lose the payment. Research shows these denials cost an additional $25–$40 in staff labor, on top of the forfeited reimbursement (1).
• Same-Day Cancellations: The Association of periOperative Registered Nurses (AORN) recommends keeping cancellation rates under 2%. But many outpatient surgery centers operate far above that threshold. Each unfilled time slot can cost over $5,000 when factoring in idle staff, unused supplies, and missed net revenue (2).

If your center performs 4,000 procedures a year, even a 5% cancellation rate could translate into over $1 million in lost margin annually.

Case Snapshot: One multi-specialty surgery center in Texas reduced cancellations by 38% within two months after implementing a pre-surgical readiness checklist that flagged missing H&Ps and lab results 72 hours before surgery. Their per-case margin went up by $320 without changing pricing or case mix.

3. Delays Aren’t Just Operational—They’re Financial

Every minute in the operating room has a dollar value. The average cost is about $62 per minute, with some procedures costing significantly more depending on location and complexity (3).

Here’s what an 8-minute delay looks like:

• $288 in direct OR costs
• $864 in cascading delays if every case runs late
• $744 in lost opportunity if the final case of the day gets bumped

These delays often stem from avoidable issues—missing labs, uncoordinated vendor scheduling, or patients arriving without preoperative documentation in the system. These aren’t clinical failures. They’re coordination failures—and they erode margins every day.

4. Margins Should Be Treated Like a Diagnostic Signal

Margins shouldn’t be viewed in isolation. If your per-case profitability looks good, but your monthly earnings are volatile, that’s a red flag. Ask yourself:

• Are we consistently using every scheduled operating room block?
• Are our first cases starting on time?
• Is our team spending more time chasing paperwork than prepping patients?

Margins are the outcome of operational health. When they shrink or fluctuate, it’s often due to bottlenecks upstream—not just financial mismanagement.

5. Who Needs to Pay Attention—and Why

• For CFOs: Delays and denials don’t just cost revenue—they inflate labor overhead. Watch for where FTEs are buried in coordination tasks that could be automated.
• For CMOs and Medical Directors: Missed labs, unread clearances, and “ghost consults” all contribute to same-day disruptions. Improving chart completeness is a patient safety issue—and a throughput issue.
• For COOs and Practice Administrators: Underutilized OR time is the clearest sign of operational leakage. Most margin is won or lost in the handoff between scheduling, access, and pre-op prep.

6. How to Protect—and Expand—Your Margins

Here’s what top-performing centers are doing differently:

✅ Standardize Pre-Surgical Preparation: Automate the workflows that get patients ready faster—so labs, consults, and clearances don’t fall through the cracks.

✅ Track Denials and Delays in Real Time: Don’t wait for quarterly reports. Build systems that flag any delay over 5 minutes or a missed insurance authorization the moment it happens.

✅ Treat Time Like Revenue: Your operating room schedule is a revenue-generating asset. The highest-margin surgery centers—those consistently achieving EBITDA margins over 40%—tend to be the ones that manage this time with precision (4).

Final Thought: Your Margin Is the Message

In today’s climate, margin isn’t just a financial metric—it’s a strategic signal. It tells you how streamlined your operations are, how connected your teams are, and whether you’re set up to scale.

For centers ready to quantify and protect their margin, the place to start isn’t in billing—it’s upstream, where coordination fails quietly. That’s often where 4–5x ROI lives.

References

1. GoHealthcare LLC. “The Real Cost of Denied Claims: How to Reduce Rejections and Recover Missed Revenue.” gohealthcarellc.com
2. Association of periOperative Registered Nurses (AORN). “Avoid Costly Case Cancellations.” aorn.org
3. Healthcare Cost and Utilization Project (HCUP) / National Institutes of Health. “Operating Room Time Cost Analysis.” PMC
4. Journal of Outpatient Experience and Innovation. “Seven Strategies for Enhancing ASC Profitability.” ScholasticaHQ