Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

What is observation care? Clearing up common misperceptions

Robbin Dick, MD
Policy
February 4, 2013
152 Shares
Share
Tweet
Share

To treat observation care as simply a loophole that allows hospitals to avoid the Medicare penalties from readmissions — as Brad Wright, an assistant professor of health management and policy at the University of Iowa did earlier this month — is to take a short-sighted approach to a complex health issue.

Observation care in fact aims to address several of healthcare’s thorniest challenges head on. In the process, a well-run observation unit can not only help reduce hospital readmission rates, but it can reduce crowding and speed throughput in the ER, save patients an extended first hospital admission (let alone a re-admission), and perhaps most importantly, improve patient outcomes.

To see how, and to clear any misconceptions some like Wright could have about observation care, it might be helpful to do some Q&A.

How long are patients usually held in observation care?

Medicare defines observation as 23 hours or less, so if a patient stays longer than that, the hospital likely won’t be reimbursed for the cost. Medical Emergency Professionals runs two observation care units, one at Western Maryland Health System in Cumberland, MD, the other at Shady Grove Adventist Hospital in Rockville, MD. Patients at these two units average a stay of 20 hours and 16 hours, respectively.

That is not to say that some other hospitals don’t keep patients in “observation” for days, or even weeks. One example might be a homeless person with a serious foot infection. A physician can prescribe antibiotics, but with no insurance and no way to follow up with the patient, they may not meet the criteria for a safe discharge. The patient doesn’t require an inpatient level of care, but the hospital can’t find an alternative environment for them to go that is considered safe. So the hospital will likely get reimbursed for the first two days of stay under observation status, but anything beyond that the hospital would swallow the cost. Furthermore, the hospital can’t get reimbursement by admitting the patient because the level of care required wouldn’t justify in-patient care. Given the situation, it’s hardly fair to say the hospital is simply exploiting a loophole. More accurately, the hospital is doing the best it can while swallowing the cost of uncompensated care that is the inevitable result of a broken healthcare system and greater societal problems.

Does observation compromise the quality of care received?

Just the opposite, in fact. Observation care seeks to treat patients whose condition doesn’t justify a hospital admissions, but may still need follow-up, testing, or a little bit of “wait and see.” For example, a patient who shows up in the ER with abdominal pain may just be constipated, or they may have appendicitis. Observation care provides the focused, rapid medical evaluations to determine the level of care needed. If further testing is needed, observation care aims to speed test results.

The reason observation care results in better patient outcomes is largely because both hospitals and emergency rooms have been historically poor at dealing with these types of patients. In both environments, resources tend to gravitate elsewhere, whether to the gunshot victim who needs immediate attention, or to the patient with the sore throat who can be treated easily and sent home right away.

Another reason is that observation care doesn’t just help reduce re-admissions, it helps prevent admissions in the first place. The longer someone is in the hospital, the greater the change they will contract a hospital-acquired illness or infection. As a recent study in Annals ofInternal Medicine showed, hospitals that reduce the length of stay also see reduced mortality and readmission rates. This risk may be worth it for patients who truly demand in-patient care, but those who don’t, keeping them out of the hospital in the first place should be a priority.

Is it more expensive for the patient to be in observation care?

Unfortunately, yes. Observation care is generally considered out-patient, and most insurance plans ask its customers to pay a greater percentage of out-patient costs. On the other hand, what patient wouldn’t want to avoid a multi-day hospital stay?

Still, this is an area where the regulatory environment is way ahead of the insurance market. Our policies have shifted toward encouraging out-patient care, because it’s cheaper and often more effective, but the rate structures of insurance plans still encourage patients to choose in-patient care. That needs to change in the future.

Is observation care a loophole for hospitals to exploit?

By now, the obvious answer to this question should be “no.” But in case it’s not clear, here is a prediction: hospitals will get eventually get penalized for re-admissions to observation units as well as in-patient services. In fact, we’ve already heard anecdotally of one hospital getting penalized for a re-admissions to observation, and all signs point toward that trend continuing.

Is there another way for hospitals to avoid the Medicare penalty?

Yes: by providing better care. Hospitals that simply move some numbers around, re-classify patients one way or another, cook the statistics a bit, calculate something differently, or otherwise try to game the system will find themselves left behind. That’s what we’ve been doing in healthcare for years, and it won’t work any more.

The future of healthcare is about providing better, more efficient care, leading to better patient outcomes. Observation care pushes hospitals to change their view of healthcare delivery, to do it in a timely fashion, and slowly but surely move them to a different reimbursement structure. That’s a good thing for hospitals, and for the U.S. healthcare system.

Robbin Dick is Observation Medicine Services Director, Medical Emergency Professionals. He also blogs at the EmergencyDocs Blog.

Prev

The ethics of EMR: How unproven technology affects patients

February 4, 2013 Kevin 5
…
Next

Should medical school deans have ties to pharma?

February 5, 2013 Kevin 8
…

Tagged as: Emergency Medicine, Public Health & Policy

Post navigation

< Previous Post
The ethics of EMR: How unproven technology affects patients
Next Post >
Should medical school deans have ties to pharma?

More by Robbin Dick, MD

  • a desk with keyboard and ipad with the kevinmd logo

    Measuring the value of emergency department care

    Robbin Dick, MD
  • a desk with keyboard and ipad with the kevinmd logo

    Is your hospital leader committed to patient-centered care?

    Robbin Dick, MD

More in Policy

  • Why affirmative action is crucial for health equity and social justice in medicine

    Katrina Gipson, MD, MPH
  • The untold story of Hispanic/Latino health: Why subgroup data matters

    Matthew B. Alonso
  • Unmasking the brutal reality of gun violence in America: a call to action for unity and meaningful change

    Osmund Agbo, MD
  • Family physicians unite at the U.S. Capitol, seeking congressional support for Medicare reform and health care transformation

    Tochi Iroku-Malize, MD, MPH, MBA, Sterling N. Ransone, Jr., MD, and Steven P. Furr, MD
  • Breaking down barriers: Illinois bill calls for cultural competency training for physicians to improve health care for LGBTQ+ community

    Michael Pessman
  • Breaking the cycle of racism in health care: a call for anti-racist action

    Tomi Mitchell, MD
  • Most Popular

  • Past Week

    • Unmasking wage disparity in health care: the truth behind the Elmhurst Hospital physician strike

      Kevin Pho, MD | KevinMD
    • A patient’s perspective on the diminishing relationship between doctors and patients

      Michele Luckenbaugh | Conditions
    • Why affirmative action is crucial for health equity and social justice in medicine

      Katrina Gipson, MD, MPH | Policy
    • How electronic health records preserve patients’ legacies in the words of oncologists

      Marc Braunstein, MD, PhD | Physician
    • Emulating Michael Jordan’s winning mindset: a path to success for health care professionals and entrepreneurs

      Harvey Castro, MD, MBA | Physician
    • Why is being a patient a difficult pill to swallow?

      Harvey Max Chochinov, MD, PhD | Physician
  • Past 6 Months

    • The growing threat to transgender health care: implications for patients, providers, and trainees

      Carson Hartlage | Policy
    • Breaking point: the 5 reasons American doctors are dreaming of walking away from medicine

      Amol Shrikhande, MD | Physician
    • “Is your surgeon really skilled? The hidden threat to public safety in medicine.

      Gene Uzawa Dorio, MD | Physician
    • It’s time to replace the 0 to 10 pain intensity scale with a better measure

      Mark Sullivan, MD and Jane Ballantyne, MD | Conditions
    • Revolutionize your practice: the value-based care model that reduces physician burnout

      Chandravadan Patel, MD | Physician
    • Breaking the cycle of racism in health care: a call for anti-racist action

      Tomi Mitchell, MD | Policy
  • Recent Posts

    • Why doctors aren’t to blame for the U.S. opioid crisis [PODCAST]

      The Podcast by KevinMD | Podcast
    • Raw humanity on night float: inspiring patient encounters and overcoming challenges

      Johnathan Yao, MD, MPH | Physician
    • Is AI the solution for the shortage of nephrologists? ChatGPT weighs in.

      Amol Shrikhande, MD | Tech
    • Unlocking the secrets of cancer conferences: an end-of-life counselor’s journey among pharmaceutical giants

      Althea Halchuck, EJD | Conditions
    • Why HIPAA is failing and what you need to know to protect your data [PODCAST]

      The Podcast by KevinMD | Podcast
    • Revolutionizing emergency medicine: Overcoming long-term challenges with innovative solutions for physicians and patients

      Anonymous | Physician

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

View 3 Comments >

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

CME Spotlights

From MedPage Today

Latest News

  • What Drug Did FDA Just Approve for COVID?
  • PET Scan for Alzheimer's Dx; Predicting Colon Cancer Survival
  • What Happens When We Classify Kids' Weight as a 'Disease'?
  • Sotagliflozin Gets FDA's Blessing for Heart Failure
  • Cardiorespiratory Monitoring Can Be Telling of Outcomes in Extremely Preterm Infants

Meeting Coverage

  • No Access to Routine Healthcare Biggest Barrier to HPV Vaccination
  • Trial Results Spark Talk of Curing More Metastatic Cervical Cancers
  • Cross-Border Collaboration Improves Survival in Pediatric Leukemia Patients
  • Monoclonal Antibody Reduced Need For Transfusions in Low-Risk MDS
  • Less-Invasive Surgery for Pancreatic Cancer Proves Safe, Effective
  • Most Popular

  • Past Week

    • Unmasking wage disparity in health care: the truth behind the Elmhurst Hospital physician strike

      Kevin Pho, MD | KevinMD
    • A patient’s perspective on the diminishing relationship between doctors and patients

      Michele Luckenbaugh | Conditions
    • Why affirmative action is crucial for health equity and social justice in medicine

      Katrina Gipson, MD, MPH | Policy
    • How electronic health records preserve patients’ legacies in the words of oncologists

      Marc Braunstein, MD, PhD | Physician
    • Emulating Michael Jordan’s winning mindset: a path to success for health care professionals and entrepreneurs

      Harvey Castro, MD, MBA | Physician
    • Why is being a patient a difficult pill to swallow?

      Harvey Max Chochinov, MD, PhD | Physician
  • Past 6 Months

    • The growing threat to transgender health care: implications for patients, providers, and trainees

      Carson Hartlage | Policy
    • Breaking point: the 5 reasons American doctors are dreaming of walking away from medicine

      Amol Shrikhande, MD | Physician
    • “Is your surgeon really skilled? The hidden threat to public safety in medicine.

      Gene Uzawa Dorio, MD | Physician
    • It’s time to replace the 0 to 10 pain intensity scale with a better measure

      Mark Sullivan, MD and Jane Ballantyne, MD | Conditions
    • Revolutionize your practice: the value-based care model that reduces physician burnout

      Chandravadan Patel, MD | Physician
    • Breaking the cycle of racism in health care: a call for anti-racist action

      Tomi Mitchell, MD | Policy
  • Recent Posts

    • Why doctors aren’t to blame for the U.S. opioid crisis [PODCAST]

      The Podcast by KevinMD | Podcast
    • Raw humanity on night float: inspiring patient encounters and overcoming challenges

      Johnathan Yao, MD, MPH | Physician
    • Is AI the solution for the shortage of nephrologists? ChatGPT weighs in.

      Amol Shrikhande, MD | Tech
    • Unlocking the secrets of cancer conferences: an end-of-life counselor’s journey among pharmaceutical giants

      Althea Halchuck, EJD | Conditions
    • Why HIPAA is failing and what you need to know to protect your data [PODCAST]

      The Podcast by KevinMD | Podcast
    • Revolutionizing emergency medicine: Overcoming long-term challenges with innovative solutions for physicians and patients

      Anonymous | Physician

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

What is observation care? Clearing up common misperceptions
3 comments

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...