AwesomeCapital: Freestanding EDs Can Increase Patient Spending

Monday, December 2, 2019

Freestanding EDs Can Increase Patient Spending

Freestanding emergency departments (FrEDs) increased emergency care spending in three of four states examined in a recent study.

Advocates of FrEDs claim they can ease overcrowding at hospital-based emergency rooms and provide prompt care in convenient locations. Opponents of FrEDs claim they increase spending on emergency room services because the care can often be provided in lower-cost settings, such as urgent care centers.

The study in Academic Emergency Medicine examined FrED data collected in Arizona, Florida, North Carolina, and Texas from January 2013 to December 2017. The researchers focused on total spending on emergency care, out‐of‐pocket spending, utilization, and price per visit.

The research generated three key observations, the lead author of the study said.

“Entry of an additional freestanding emergency department in a local market was associated with an increase in spending per capita in three of four states. Entry was generally associated with an increase in emergency visits per capita, as well as out-of-pocket spending,” said Vivian Ho, PhD, director of the Center for Health and Biosciences at Rice University’s Baker Institute for Public Policy in Houston.

The research features several data points:

In local markets in Florida, North Carolina, and Texas, entry of an additional FrED resulted in a 3.6 percentage point increase in emergency provider reimbursement per insured beneficiary
In local markets in Arizona, entry of an additional FrED resulted in no significant reimbursement change
In local markets in Arizona, Florida, and Texas, entry of an additional FrED increased the number of emergency care visits by 0.18 per 100 insured beneficiaries
In local markets in North Carolina, entry of an additional FrED did not significantly change the utilization rate
In local markets in Arizona, Florida, and Texas, entry of an additional FrED increased the average estimated out-of-pocket payments for emergency care by 3.6 percentage points, but out-of-pocket payments decreased 15.3 percentage points in North Carolina

Interpreting the Data

The research is a cautionary tale about FrEDs, Ho and her co-authors wrote. “Rather than functioning as substitutes for hospital-based EDs, FrEDs have increased local market spending on emergency care in three of four states’ markets where they have entered. State policymakers and researchers should carefully track spending and utilization of emergency care as FrEDs disseminate to better understand their potential health benefits and cost implications for patients.”

The utilization findings provide weak support for proponents of FrEDs, Ho said.

“Some of the observed increase in utilization may have led to increased convenience for patients seeking emergency care. However, the overall increase suggests that FrEDs don’t serve as a substitute for hospital-based emergency care. And other studies in the literature have found that entry of FrEDs do not lower waiting times at nearby hospital emergency departments,” she said.

The spending findings support the claims of FrED critics, Ho said. “The results are consistent with critics’ concerns that FrEDs increase spending on emergency care. FrED operators have come to realize that, ‘If you build it, they will come.’ Other research suggests that much of the care that patients receive at FrEDs could be obtained at much lower costs at urgent care centers.”