What makes you different? Whatever it is, that's the thing that sets you apart and makes you stand out from the crowd. Sometimes, however, your point of differentiation is not what you'd like it to be.

"What makes [surgery centers] different in part is that we perform these procedures at a lower rate," says Nap Gary, chief operating officer at Regent Surgical Health and president of the board of directors of the Ambulatory Surgery Center Association.

Mr. Gary was part of an eye-opening panel discussion at May's ASCA meeting in Nashville, Tenn. He was joined by leaders of 2 other ASC corporate partners and the head of ASCA. Their message: Rather than curse the payment differential, ASCs should celebrate that they're the low-cost alternative to hospital outpatient departments. Remove low-cost from that sentence, and what do you have? ASCs lose their reason for being, their place in the healthcare system and their political pull.

"It's frustrating that [the payment differential] exists, but it's nice that it's there," says Michael Rucker, executive vice president and chief operating officer at Surgical Care Affiliates, which operates 185 surgical facilities, including surgery centers, surgical hospitals and hospital surgery departments, in 34 states.

Nobody wants to be known as the cheaper choice, but cost is the one clear-cut advantage that ASCs have over hospitals. ASCs might win out on quality of care, infection rates, comfort and convenience, too, but those are more subjective measures.

Yet the very thing that makes ASCs attractive to payors, patients and government regulators is the very thing they've been trying to change about themselves. ASCs have long lobbied for more equalized rates, but this desire to be reimbursed closer to the much higher hospital outpatient rates could leave them weak and vulnerable. It also fails to take into consideration the fact that hospitals have an unfunded mandate to care for the indigent and the poor, but that's another story for another month.

"Our rates are too low as they are," says Chris Holden, president, chief executive officer and director of AmSurg. "Dragging others down to our level is not going to solve the problem."

Rather than drag HOPDs down to where ASCs are, ASCA's Bill Prentice says he'd like to see the rates meet someplace in the middle. But that could backfire. It's not a stretch to say that equalized reimbursement rates could endanger physician ownership.

We know margins are narrow and competition is fierce nowadays, but the answer's not to pay hospitals less and ASCs more. Surgery centers must compensate for the reimbursement inequity with the same low-cost, high-volume model that's worked well for decades. If the ASC industry is going to compete with hospitals on cost, it's a battle that they must lose — and lose convincingly — at all costs.