Healthcare Matters

A recent paper published just yesterday in the Annals of Emergency Medicine (AEM) entitled, “A Novel Approach to Identifying Targets for Cost Reduction in the Emergency Department” pretty much stands conventional wisdom around “out of control ER expenses” on its head. Not only does the study indicate that reducing non-urgent visits to Emergency Departments –a major focus of most insurance plans—is a trivial pursuit from a cost savings perspective, but the study also points out that chasing this supposed rich area of savings serves to distract from other potential opportunities that actually do exist.

A little surprised?

“The focus on non-urgent ER visits distracts from the potential savings that do exist in the area of hospital admissions,” said lead study author Peter Smulowitz, MD, FACEP, of Beth Israel Deaconess Medical Center in Boston, Mass. “Emergency department patients are responsible for about half of all hospital admissions, and those admissions account for about 15 percent of all health care expenses. Many patients are admitted to the hospital from the ER either because the gaps in the rest of the health care system leave patients without other good care options, or because a fragmented system has failed to care for their complex chronic disease.”

The greatest potential cost savings with respect to ER visits lies in the intermediate area of complex acute and chronic disease, not in diverting to other settings the minor injuries and illnesses that are often lumped into the term “non-emergency” ER visit.  “This is not to suggest that low-urgency visits are necessarily best treated by episodic visits to the ER or that the ER should serve as a replacement for timely primary care. Rather, the study suggests that focusing on the non-emergency category of visits as a cost savings strategy in and of itself is not likely to yield substantial savings.”

The study divided ER visits into three categories and assessed the potential cost savings:

• True Emergencies –there were no available cost savings as these cases require the most expensive resources available.
• Intermediate/complex conditions — the potential savings amounted to a maximum of 2.5 percent of all health care spending, which Dr. Smulowitz attributed mostly to reduced hospital admissions. The expanded use of observation units in emergency departments offers one opportunity to reduce costs by reducing hospital admissions.  Collaboration between emergency physicians, case managers and community based services could also allow for patients to be cared for at home or in short-term facilities rather than being hospitalized because of a lack of safe alternative options.
• Minor injuries and illnesses –For minor injuries and illnesses, the potential cost savings were between 0.25 percent and 0.8 percent of health care costs, part of which would be offset by the additional cost of establishing new urgent care centers or adding after-hours or weekend primary care availability.

“In an atmosphere of cost-cutting, policymakers still need to re-think how we pay for emergency care,” said Dr. Smulowitz.  “The current system doesn’t support the standby costs mandated by federal law for 24-hour-a-day readiness to handle car crashes, heart attacks and pandemics.”  The study also indicates that the current payment model does not adequately reimburse ER’s for their standby capacity –except in the case of large IDNs where demand can be reliably projected.  If we’re all insured under the Act, then an uncapitated fee-for-service model is what is recommended.

Chronic disease management is the culprit –yet again. These care models really do need to become patient home-centered and the related opportunities for entrepreneurial-minded acute care centers seem more than enticing. It seems to me that supply chains that are now focused on servicing the patient centered home (a network) could be more opportunistic in their thinking. They could move more directly to adopt telemedicine and other remote monitoring technology-based approaches to chronic care –approaches that serve a patient in his/her private residence.

—Tom Finn