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Emergency Departments are in the Center of the Healthcare Reform Storm

By Linda MacCracken/Tuesday, December 17, 2013

Linda MacCrackenThe recent New York Times article, As Hospital Costs Soar a Single Stitch Tops $500, discusses the cost of an Emergency Department (ED) visit. EDs are under intense scrutiny by all parties – payers, employers, providers, and the government – about cost, quality and patient-engaged care. In fact, nationally, 62% of ED visits are urgent care (not emergent), making them more of a “department of available medicine” than necessary. This varies across the country,  where some markets show ED usage at 42% urgent visit share, while others tower north of 90%. Avoidable visits or overuse are typical of both Medicaid/self pay and commercially insured individuals. A national savings of $4.4 billion is possible if 20% of ED visits are redirected to an alternative or lower-cost care site.

Reform-based Medicaid expansion implies more demand for EDs, and requires adequate actual or virtual capacity. The opportunity is to provide alternative care settings. Some providers have had success in offering preventive screening physicals, care at urgent care centers (that accept insurance) and direct one-one patient engagement. One health system was able to reduce ED business by $1.5 million in Medicaid/self pay by reaching out to “frequent fliers” (5 or more ED visits per year) and educate them that the ‘next time,’ they can get the same or more appropriate care at a community health clinic. Providing the right capacity for the right care type in the right service setting goes a long way to protect the ED for the truly medically needy.

Commercially insured patients can also over-use the ED. 29% of employer-paid commercially insured patients, presenting with both an unavoidable and emergent condition, belong in the ED. 42% could have been cared for in a primary care setting. The net savings for redirecting commercially insured visits to a physician office setting is $1171 per visit. This invites a structure for an urgent care service line in physician offices.

The New York Times article states that compared to alternative outpatient care, the price of an ED visit is high, especially from the view of the cost-accountable consumer. However, EDs provide crucial health services, and there is a price for those life saving resources. What types of care belong in the ED is another matter that underscores its role at the eye of the storm of shifting outpatient care. All stakeholders – payers, employers, consumers, the government, and providers – are participating in the shift.

For more details, please download one of these publications.
Delivering Profitable Growth Through Market Intelligence, Dunn, MacCracken, 2012
Avoidable Emergency Department Usage, HealthLeaders Media Fact File, October 2013

Linda MacCracken
VP, Advisory Services
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