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Pharmaceutical sales reps we have spoken with discussed illustrative situations where ASCs dropped a product due to an incremental cost of just $5 per procedure. Thus, we believe the sophisticated, profit focused ASCs were the primary drivers of growth when reimbursement was set at 106% of cost and will be the primary drivers of the collapse, as the lost pass through increases the drug's cost to 35% of ASCs gross revenues (per case) beginning January 1, 2018. As surgeons do not own a stake in hospital outpatient centers and generally receive a flat fee for each procedure in that setting, the incentives of doctors and hospital outpatient surgical centers are not as aligned as they are in ASCs.
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