A recent survey of 74 C-suite executives, conducted by Health Affairs, revealed that 93% of hospital executives think that health reform will improve healthcare, and that is a testament to integrated hospital innovation that is already underway. These leaders, whose organizations on average, employed 8,520 workers and saw annual revenues of $1.5 billion, have an optimistic view and this is indicative of the continuing work undertaken by providers to make healthcare more accessible, cost efficient, and quality focused.
The executives in this study cited three strategies as critically important to address in order to reduce costs:
By demonstrating better cost controls and adaptations, our hospital clients have seen margin improvement from 3.5% to 5%.
- Reduce the number of hospitalizations
- Reduce the number of readmissions
- Reduce the number of emergency room visits
For every Emergency Department (ED) visit that is seen in a physician office, there would be a cost savings of $1171 per visit. 62% of the ED visits are URGENT, and not EMERGENT. This number has decreased annually over the last five years, but room still exists to cut costs further. By redirecting even 20% of the ED visits nationally, we could save $4.4B; a step forward that has many hospitals very engaged. Use of the ED for urgent care varies – with a range of 42% to 92% by market. An expanded primary care network, more accessible urgent care and one-on-one patient or prospect engagement are keys to shifting the use of the most expensive outpatient program, while making room for the true emergencies. This is a cost, quality, and access focal point for hospitals to continue their innovation, in addition to benchmarked cost effectiveness and care delivery quality excellence.
VP, Advisory Services
The 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
VP, Advisory Services
A recent NPR article discussed a study in the Journal of the American Medical Association pointing out that complex problems cannot be solved by simple solutions. The problem to be solved is the high cost of emergency department (ED) utilization. The solution being developed by many states: Don’t pay for non-emergent visits. Sounds logical. But, as the authors point out, patients don’t go to the emergency department with diagnoses, they go with symptoms. A person with chest pain and shortness of breath at 3 a.m. should be evaluated on an emergency basis; if that person is having a heart attack, the visit is justified. If the person actually is having gastroesophageal reflux, is the visit not necessary? How is the person to know? Clearly, some people use the ED for non-emergent conditions, but making payment decisions based on discharge diagnoses has the possibility of discouraging patients from seeking needed care. In this study, only 6.3% of ED visits were classified as “primary care-treatable.”
The article makes an excellent point—“Between 4.5% and 8% of individuals in the ED are frequent users, but they account for 21% to 28% of visits.” In a 2003 Massachusetts study, 3.8% of ED users accounted for 17.6% of all ED visits. Our own data show similar results for these ED 'frequent flyers.' Perhaps a better way to reduce ED costs is to focus on those individuals who are the most frequent users, addressing their medical and socioeconomic problems, rather than penalizing those who genuinely believe they are having a medical emergency. The Centers for Medicare and Medicaid Services (CMS) should consider studying the profiles of frequent users of the ED and designing policies to address their challenges.
In a fee for service environment, ED overutilization is a logistic challenge for hospitals, but in an accountable care organization environment, with hospitals financially responsible for the health of the population it serves, ED overutilization becomes a financial issue. It is time to take a detailed look at this problem.
The demand for the Emergency Department (ED) is likely to climb and surge even further with the population gaining insurance under the Affordable Care Act. With more than 65 percent of current ED visits presenting as urgent (not emergent) visits, the anticipated demand surge from newly insured individuals will exacerbate the existing problem of patients using one of the most expensive care sites in our system.
What an opportunity! An opportunity to engage ED super-users and redirect them to better sites for their care. An opportunity to engage consumers pre-ED visit and integrate them to other sites of care. An opportunity to introduce Emerging Care to non-emergent sites of care. To find out how big the opportunity might be, we priced out a proposal made in a Health Affairs article to redirect 20 percent of ED visits to other sites of care — it created a national savings of $4B annually. How much could we save locally and how would we go about it? The following lists some of the solutions I’ve seen — which I offer for consideration to the healthcare community, in the call for redirecting consumers to the right care site, at the right time, for the right reason:
- Redirect Super-Users: Direct personalized messaging about the right sites to use for any individuals with 5+ visits/year.
- Let ‘em come — on a schedule: Face it. Some consumers love the ED. Love the assurance of the best trained doctors taking care of the scary stuff. Let them book appointments at the ED clinic.
- Learn to Self Manage: For those with risk factors — send them personalized ED-prevention care messages to remind them to take care of themselves.
- Call v. Show Up for the Curiously Considering: Nurse- or extender-staffed call /live chat lines to discuss impulse driven reasons for the ED to take preventive steps.
- Next time — to the Doctor: Employ a discharge patient coach who schedules patients into physician practices or the federally qualified community health center.
- Open Door to the Fast Track: Provide mobile applications showing wait times and a way to reserve time for the walk-in patients.
- Send Them to the Store: Since 85 percent of retail users have primary care providers (PCPs), I wonder how many of them split their time in EDs? Optimize the experience between PCP and ED for primary care, planned, urgent, and emergent care.
A recent article in HealthLeaders about usage for emergency departments, as well as research we've done recently at Truven Health Analytics, highlight a number of issues around health care utilization. The article touches on the diversity of problems represented by repeat emergency room users, but the role of mental illness may be underrepresented in the figures. Emergency room records focus on acute treatment – for example, trauma, respiratory, or cardiac issues – and may ignore underlying factors that contribute to the acute condition.
In a sample from our MarketScan® database of commercially insured patients with ER visits in 2011, 45% of the patients with an ER visit had at least one more ER visit in 6 months of less. Overall, 13% of the ER visits were associated with patients having a diagnosis of psychosis some time during the year; but patients with a diagnosis of psychoses made up 29% of those patients having 5 or more ER visits within 6 months.
I happened to look at Medicaid ER visits with an eye toward understanding whether mental health might play a role here too, and found that this pattern holds true and also there seems to be a gender-based utilization difference. Fifty-six percent of Medicaid ER visits in the sample were female; but ‘frequent flyers’ - patients with 5 or more visits to an ER in 6 months - who also have a diagnosis of psychoses, are 73% female.
If we consider some percentage of trips to the ER as being a failure to effectively treat and manage psychoses, then this indicates female psychoses patients appear to be associated with a higher number of acute failure episodes.
Director of Market Analytics