Patients admitted through the emergency department are more profitable than patients admitted electively

Abstract

Study objectives: We examine the association between financial performance and hospital length of stay between patients admitted through the emergency department (ED) compared with patients admitted electively. Methods: This was a retrospective review of all admissions to all services in the fiscal years beginning July 2000 and ending June 2003 in an academic inner-city tertiary referral center. Data collected included service volume, net revenue, cost (direct fixed and variable and indirect), direct margin, and net profit. Direct costs are expenses that pertain to the provision of patient care. Indirect costs are defined as costs not associated with provision of patient care (examples include administration, engineering, and finance). Direct margin is defined as the amount by which net revenue exceeds the sum of direct fixed and variable components. Net profit is the amount by which net revenue exceeds the sum of all costs, direct and indirect. Financial data for the ED group includes all costs generated in the ED, as well as hospital costs. Elective admissions included direct admissions and transfers into the hospital not involving the ED. For one fiscal year, case mix index (a measure for case severity in which higher case mix index represents higher severity of illness) and length of stay were also captured. Results: Of the 89,757 discharges during the study period, 66,118 (73.7%) patients were admitted electively and 23,639 (26.3%) were admitted through the ED. There were also 21,223 admissions to the trauma center included in the 89,757 patients that were not included in the ED group. Total net revenue, costs, direct margin, and profit amounts were all higher in the elective group than in the ED group. Higher totals were due to the higher overall number of admissions in the elective group. However, when the direct margin is expressed as a percentage of net revenue, the ED group was higher (40.3% versus 36.6%). Patients admitted through the ED did generate a profit despite inclusion of ED costs. This profit was also 27% of total hospital profits generated from admissions. In addition net profit as a percentage of net revenues was higher in the ED group by more than double (9.8% versus 4.7%). In the year during which case mix and length of stay data were captured in fiscal year 2002, there were 22,183 elective admissions and 8,032 ED admissions. Overall average length of stay was similar in the ED group (5.8 days for ED group versus 6.0 days for elective group), and case mix index was lower (1.10 for the ED group and 1.28 for the elective group). Conclusion: Conventional wisdom views the ED as a cost center, a loss leader. In this study of 3 years and nearly 90,000 admissions, patients admitted through the ED generated a profit. ED patients generated a profit despite lower case mix index, which is usually associated with lower revenues. In addition, the higher direct margin and profit as a percentage of net revenue shows the ED to be more efficient when involved in the care of admitted patients.