The ER is a cost effective place to receive acute care

There is a persistent narrative about emergency rooms. This narrative says that emergency rooms are overly expensive places to receive healthcare, that they are a cost drain on the hospitals they are attached to, and that they are a key driver of rising healthcare costs.

A RAND study released recently challenges most of that narrative, and lends support to a view that most of us emergency physicians have long held: that the ER is actually a key hub of medical decision-making, as much responsible for saving healthcare dollars as spending them, and one of the most cost-effective places to receive acute care in the country.

According to the RAND report: “Politicians are fond of asserting that ‘emergency department care is the most expensive care there is.’ The numbers suggest otherwise. EDs provide 11 percent of all outpatient visits and are the portal of entry for roughly half of all hospital admissions; however they acount for only 2-4 percent of total annual health care expenditures.”

The report also noted that of the roughly $850 billion that was spent on outpatient care in 2006, less than 10 percent of that could be attributed to EDs, “suggesting that aggregate spending for ED care is in line with its share of outpatient care delivery.”

So if emergency rooms aren’t the massive cost suck that we’ve been repeatedly told they are, then what are they? In fact, EDs are occupying an increasingly central role when it comes to determining who is admitted to hospitals, when, and under what circumstances.

One of the study’s key findings is that the share of hospital admissions coming from the ED is growing, mostly because primary care physicians are diverting their patients there. Whereas historically, PCPs sent a larger portion of their patients directly to the hospitals, they are increasingly taking advantage of the ER’s capacity to rapidly assess and treat complex diseases.

This trend toward increasing use of the ER to diagnose and treat complex health problems fits in to a larger narrative to come out of the report: the increasingly central role that emergency physicians occupy within the nation’s healthcare system. Emergency physicians in the ER are now the key decision maker and gatekeeper for nearly half of all hospital admissions. And since inpatient care accounts for 31 percent of all U.S. healthcare spending, that means emergency physicians are essentially deciding how, when, or even if that money is spent.

Which leads me to another key takeaway, which is that EDs are increasingly responsible for money not being spent. If emergency physicians are able to divert patients away from hospital stays, either by effectively managing their treatment through some sort of transition care program, or by placing them in a temporary (and much lower cost) observation care unit, that means less money is being spent overall.

The bottom line is that the existing narrative of ERs as simply cost centers to be contained is not supported by the changing realities of healthcare. Rather, emergency departments and emergency physicians are increasingly crucial front-line players in containing healthcare costs.

Angelo Falcone is chief executive officer, Medical Emergency Professionals (MEP).  He blogs at the EmergencyDocs Blog.

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  • Ron Smith

    What you didn’t discuss is comparative cost to primary care in an office as related to ER costs. Clearly the ER is used mostly as a convenience or option rather than having or establishing a relationship with a primary care physician. Having that relationship I believe is primary to reducing costs. ERs can never see patients with the same diagnosis codes that I see in my office. You might then say that patients can’t get access to primary care providers because they are simply not available. I don’t see that in my Pediatrics practice. The more care that can be provided in a primary care physicians office just can’t help but reduce the ER use and cost and even the hospitalization costs which I suspect would be less.

    • buzzkillerjsmith

      Right. This is the obvious important comparison. Without it Dr. F’s post is mere rhetoric. That said, it might be true that EDs are cost-effective even if PCP visits are taken into account, but he did not tell us one way or the other.

  • Gus

    “Politicians are fond of asserting that ‘emergency department care is
    the most expensive care there is.’ The numbers suggest otherwise.


    Okay. If I’ve got rash, or a sore back, or an upset tummy, going to the ER is not any more expensive than going to my PCP or a “doc in the box”/urgent care center?

    In whose world is this the case?

    In my world, emergency department care certainly IS the most expensive care there is.

  • The Pediatron

    This pediatron doesn’t admit patients directly to the hospital because in the age of hospitalists, I no longer have the ability to affect care (eg. write admission orders) on the ward at any of the hospitals I admit to. I’d imagine this is the new reality for many PCP’s. Also, many conditions we refer are not appropriate for direct admission: asthma, pneumonia, dehydration, injuries are the top ones for us. It’s what’s appropriate for the patient and family, NOT the PCP or the ED.

  • querywoman

    Once I took a suicidal friend, who wasn’t a professional patient, to the Veteran’s ER. While waiting, some old goat came in who needed some blood pressure pills. He was told he would only get a certain number of pills and that he would need to go to the day clinic for more.
    I nudged my friend and told him, if you stay on pills, please don’t wait til the last minute like that guy if you need more.
    It makes it more expensive for us all, so I said. We kept discussing whether or not it really makes it expensive. It’s still a doctor visit, blah, blah, blah!

  • querywoman

    For the people who refuse to pay anything, the ER is cheaper! Those of us who don’t mind paying our copays would rather go to an office for a scheduled visit!

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