Over the past decade, there has been tremendous growth in freestanding emergency departments (ED) in the United States. While freestanding EDs have in fact been around since the 1970s, this recent growth has been spurred by a variety of factors including: overcrowded hospital-based EDs, expanding demands for emergency care, a desire by health care systems to create satellite locations to attract patients, health care entrepreneurship, and evolving state rules that have made it easier in some localities to open them.1 Freestanding EDs are physically separate from hospitals. Freestandings may either be health system or hospital-affiliated, or independent, depending on ownership and local state laws. Yet like hospital-based EDs, freestanding EDs are open 24/7 and can evaluate and stabilize patients with resources similar to any ED: advanced diagnostic and laboratory facilities and staffing by emergency physicians, but in general do not have onsite, in-person specialist care like surgery or neurology. The meteoric rise of freestanding EDs has generated considerable debate, and to put it bluntly, deep acrimony in some parts of the country. First, concerns have been raised about freestanding ED billing practices. Freestanding EDs charge both a provider fee and a facility fee—similar to hospital-based setting and have largely similar prices.2 Critics contend that this is unjustified because they tend to see lower-acuity patients than EDs and are not exposed to the same Emergency Medical Treatment and Active Labor Act (EMTALA)-related obligations. However, freestanding ED operators argue that acuity is largely similar and that facilities fees are justified as considerable fixed investments (i.e., CT scanners) are required to offer ED-level services. Freestanding EDs also have higher staffing costs with board-certified emergency physicians, compared to urgent care centers, which are often staffed by nonboarded doctors or advanced practice providers. Data also show that freestanding EDs tend to preferentially locate in more affluent, richly populated areas and not in higher need, poorer communities.3,4 However, this practice is similar to urgent care centers, which also locate in similar, wealthy areas.5 From the perspective of patients, there are also concerns over the high bills after freestanding ED care—particularly when the freestanding is out-of-network with local insurers. Billing is a particular challenge because many freestanding EDs have not been able to negotiate favorable rates with insurers or, in some cases, any rate for that matter. In fact, a strategy of many insurers has been to try to shut out freestanding EDs entirely and refuse to pay for care that has led to considerable litigation, as well as business problems that have led to many freestanding ED closures. Proponents of freestanding EDs argue they offer a better product than many hospital-based EDs and certainly urgent care centers. They stress the vital importance of having access to board-certified emergency physicians. They tout shorter waiting times than hospital-based EDs and a more patient centered care experience. In fact, the bright, spiffy facilities are a more pleasant environment, rather than the chaotic, often hallway-based care of many inner-city EDs that lack natural light. In addition, some data show that freestanding EDs may reduce hospital admissions because they are physically separated from the hospital. And in the case of independent freestanding EDs, they don’t have the same financial incentive to admit.6 Nevertheless, the underlying concern by insurers as well as policymakers is that the entry of freestanding EDs—or other acute care alternatives for that matter—will raise the cost of providing emergency care. This is of particular concern today in an environment of rising health care costs.7 Freestanding EDs have gained so much attention that it has risen to the level of MEDPAC, a federal advisory committee, which recommended cutting Medicare payments to freestanding EDs by 30% that are within 6 miles of a hospital. However, MEDPAC also recommended to promote the “rural” version of freestanding EDs, allowing them to not only bill standard fees but also to receive annual fixed payments to keep them afloat.8 In this issue of Academic Emergency Medicine, Ho et al.9 shed further light on the freestanding ED debate. Specifically, Ho and team assessed how the entry of freestanding emergency EDs impacted utilization and overall spending on emergency care in four states from 2013 to 2017: Arizona, Florida, North Carolina, and Texas. In the end, they found mixed effects. In Texas, Florida, and North Carolina, an extra freestanding ED increased emergency provider payments per beneficiary by 3.6% and out-of-pocket costs by $3.60 per person. By contrast, a similar, additional freestanding in Arizona did not impact overall payments. This occurred primarily because prices went down more than 10% and emergency care out-of-pocket costs even declined $15.30 per person. When it came to utilization, an extra freestanding resulted in one additional ED visit per 500 beneficiaries in Texas, Florida, and Arizona, yet there was no change in utilization in North Carolina. So, what are we to make of these divergent effects? In my view, we can make several inferences. First, we should not be surprised that in health care—a supply-sensitive service—adding service locations would increase costs and utilization. At the margin, the presence of another facility should lead to greater demand for services, at least according to the literature. For readers of the Dartmouth Atlas, we know that more hospital beds are linearly associated with higher hospitalization rates—called Roemer’s Law by health care policymakers—more cardiologists lead to more heart procedures and more spine surgeons in a community leads to more fused spines.10–11 But how about when a new alternative care site directly competes—at least conceptually—with another? The “We will replace ED visits and lower costs …” pitch is a frequent marketing tactic by acute care alternatives seeking coverage, yet in acute care, studies have consistently demonstrated this claim to be fictional. Opening retail clinics has essentially no impact on ED visits.12 Even the latest innovation—direct-to-consumer telemedicine—is almost entirely additive, with only 10% of visits replacing outpatient visits, primarily visits to clinics.13 In a recent study, the opening of an urgent care center was found to have a significant effect on ED visits at only one of two nearby academic sites. However, the effect was estimated to lower low-acuity ED visits by only 1% or 66 visits in a year to a busy academic department, a relatively meager effect.14 What the study by Ho study and others demonstrate is that the effect of adding more competing health care capacity—be it freestanding EDs or other alternatives—depends greatly on existing players in the market (both acute and primary care), current prices and competition, and how the population wants to consume health care. In aggregate, these studies disconfirm the narrative that we can make health care cheaper by just increasing sites of care in an environment where people have the choice to go anywhere that is most convenient. It also does not corroborate uniform claims by insurers that freestanding EDs drive up costs and utilization nor the narrative by freestanding ED operators, telemedicine providers, and others that by offering more, attractive alternatives will draw people away from hospital-based EDs. Stepping back, we need to consider whether we are even asking the right question when it comes to freestanding EDs. Specifically, is there a way to leverage what is good about freestanding EDs—speedy, comprehensive service by highly trained professionals in a pleasant environment—and separate that from the payment model (fee for service prices similar to hospital-based EDs), which has led to an anaphylactic, unwelcome reception by the insurance industry? Perhaps the right question is how can freestanding EDs actually improve care and enhance value. The answer lies in models that leverage freestanding EDs in ways that are connected to the broader health system and longitudinal care. The archetypal example is Kaiser Permanente, which leverages freestanding centers for emergency and observation care in the greater Washington, DC, area and in other parts of the country. These centers are different because they are connected to the broader system of care. These centers are not used in isolation as (i.e., the traditional disconnected model) but are used by patients and providers as a thoughtful link in the longitudinal continuum of care that also includes a healthy dose of telemedicine.15 Another promising model is the Culinary Care Center in Las Vegas, NV, which is operated by my employer US Acute Care Solutions. The Culinary offers the Culinary Union’s >90,000 employees zero copay emergency-level care and is well staffed by emergency physicians and advanced practice providers. Because the Union members have zero copay, they liberally use the Culinary for emergency care and tend to avoid other sites for emergency care unless absolutely necessary. They also have the ability to access on-site primary and dental care if needed. The model has saved the Culinary Union an estimated >$20 million per year, primarily in avoided costs of outside emergency care and sources of inpatient care. Ultimately, perhaps we need to rethink freestanding EDs—and other alternatives. The question should not be how adding another disconnected service impacts costs and utilization. The answer from the literature is that it will in most cases add costs and utilization—as the Ho paper found in three of four states—and is the expected outcome. We need to shift the discourse toward connectivity and value-based care and figure out how patient-centered models like freestanding EDs can be integrated into the longitudinal care system, fill unmet public health needs (i.e., in rural settings), or both.16–17
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Apr 15, 2024
James Mangano + 2
Open Access