Loss leaders – Emergency rooms are going through an expansion boom:
YET despite all these factors, investing millions of dollars in emergency departments does not seem to make sense at first glance. Hospitals in New York State have been losing money for seven years, according to the Healthcare Association of New York State, which represents hospitals, nursing homes and other health care providers, and emergency departments tend to be money losers. They are expensive to run, with high-tech equipment and intensive staffing, and many patients they treat don’t need such high-level care.
But hospitals are making the investment because the emergency department is the portal for admissions, as well as the first impression many people get of the hospital. “E.R.’s tend not to be profitable on a per se basis, if you look at it as a revenue center,” said Kenneth E. Raske, president of the Greater New York Hospital Association. “However, where the equation changes is that half the admissions on the inpatient side come in from the emergency department, so from the hospital economic point of view, having a top-drawer emergency department is tantamount to having a good hospital.”