The Rise of the Freestanding ER (Part 1 of 2): Cost and Confusion

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FSER-thumb1Perhaps you’ve heard about the stand-alone ER craze that is sweeping the country so quickly one healthcare expert has called its fantastic growth, “the wild, wild West.”

Phil Galewitz of Kaiser Health News reports that the number of stand-alone ERs “has doubled to more than 400 in the past four years, according to data from the American Hospital Association and state health agencies,” and the impressive rapidity of this growth is being driven by a various hospital chains, such as HCE (who is looking to open its seven stand-alone in Florida) and WakeMed Health and Hospitals (looking to open its fourth).

Galewitz writes, “Nowhere is the trend hotter than in the Houston metropolitan area, with 41 freestanding ERs and 10 more under development. Counting the freestanding ERs and traditional hospital-based ERs, greater Houston has 150 emergency rooms — twice the number as greater Miami — even though its population is only slightly biggeraccording to a Kaiser Health News analysis.”

Hospital consultant Howard Gershon said, “It’s the wild, wild West and these things are growing like wildfire.”

Interestingly enough, Gershon points out, the primary owners of these Houston stand-alones are ER doctors, “who see them as more profitable than urgent-care centers, which are outpatient clinics that treat most illnesses and injuries but are not designed to handle life-threatening conditions such as chest pain, difficulty breathing, or severe bleeding. Because the freestanding emergency rooms can charge higher rates, even though they typically don’t treat heart attacks or trauma, or receive patients by ambulance.”

Obviously, the main attraction for the consumer is the convenience.

But convenience at what cost?

A lot, says insurers, who end up paying two to three times more per patient for a routine visit “that could be provided in less costly settings.” In fact, freestanding ERs may be aggravating the very problem healthcare reform has sought to diminish in demanding fewer visits to standard ERs.

With freestanding ERs, Galewitz points out, “insured patients have little incentive to drive past more expensive, freestanding ERs because their co-payment is only $50 or $100, modestly more than what it might cost for a visit to an urgent-care center or doctor’s office. Their insurers pay the balance.”

Insurers, for their part, can’t stop the patient from going to one, given Texas state law, nor can they battle the facility fee that is tacked on to the physician’s fee.

If you think insurers are upset over this, you can imagine how uninsured patients feel when they get their bills from the standalones, especially since quite a few freestanding ERs look just like urgent-care centers, leading to a bit of confusion among consumers.

All of this has led to various efforts to protect consumers and educate them on the pros and cons of freestanding ERs.

Speaking of the pros, we’ll look at a few of those in our next post. In the meantime, as healthcare executives, what are your thoughts on freestanding ERs? Does it take pressure off the hospital ER? Is it good for the consumer? Or, as implied above, could it actually add more cost to the system?

-by Pete Fernbaugh

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