Are all reductions of emergency room (ER) use good? Reducing ER use has been a stated goal for “bending the cost curve” in U.S. health care for years. And both policy makers and health care system stakeholders are interested in the changes in ER use. A quick search for recent coverage led to these stories (and many more):
- ER Use Dropped As Obamacare Kept Young Adults On Parents’ Plans
- ER visits down at LA County public hospitals since Obamacare
- ER Visits Jump Under ACA
- Washington Medicaid ER Visits Down 10% After Launch Of Initiative To Slow Unnecessary Utilization
- Medication Adherence Reduces ER & Inpatient Expenses By 34% For Complex SMI Consumers
- Washington State Court Bans ‘Psychiatric Boarding’ In Emergency Departments
- 20% Drop In Oregon Medicaid Hospitalization Rates For Consumers With Chronic Conditions Attributed To ‘Coordinated Care Organization’ Model
But the financial impact of the many initiatives to change health care utilization patterns and divert Americans from ERs is starting to be felt by hospital systems. This tension is the focus of two recent articles on the impact of urgent care centers (UCC) on ER use: Hospitals Say They’ve Lost Insured Patients to Urgent Care, in the Texas Tribune and a related piece in The New York Times, Texas Hospitals Say They’ve Lost Insured Patients to Urgent Care. I wasn’t surprised that urgent care centers are having an impact on ER use – I thought that was the point. But, I was surprised that the hospital executives seemed surprised.
These news stories are focused on hospitals in Texas – but this likely applies to all states that have not expanded Medicaid. The hospital executives contend that they are competing with urgent care clinics for insured patients (Urgent Care Centers Compete With EDs For Patients) at a time when they are getting less money to cover the cost of treating uninsured patients with the reduction of disproportionate share payments (see What Is DSH & Why Should You Care?). The statistics are interesting – there are more than 450 hospitals and 435 urgent care facilities in Texas. The result? The Texas Hospital Association estimates that unpaid ER bills in Texas cost $5 billion per year for the state’s six million uninsured residents.
Urgent care centers by definition, provide walk-in care for illnesses and injuries that need immediate attention but aren’t emergencies. The Center for Studying Health System Change (HSC) reports that the number of UCCs in the U.S. has grown to over 9,000 facilities in the last 20 years (The Surge In Urgent Care Centers: Emergency Department Alternative Or Costly Convenience?). Like all disruptive innovations, UCCs are putting pressure on traditional service delivery in a number of ways. First there is the issue of cost – Forbes reports, in Drive-Thru Health Care: How McDonald’s Inspired An Urgent Care Gold Rush, that minor ailments treated at UCCs instead of ERs offer big savings, including:
|Urgent Care Cost||ER Cost||Percent Savings|
|Upper Respiratory Infection||$111||$486||77%|
|Urinary Tract Infection||$110||$665||83%|
Then there is the issue of consumer experience. Here is the market positioning description of urgent care provider American Family Care from the Forbes article:
American Family Care was designed to deliver medicine like hamburgers: customer-friendly and efficiently. Eliminating appointments and cutting down on wait times are the first steps, but they’re only part of a customer-satisfaction puzzle that includes cheerful assistants, flat-screen TVs and free Wi-Fi. In-house pharmacies, digital X-ray machines and drug test facilities make them one-stop shops for patients. Doctors focus only on medicine, in standard ten-hour shifts and with no on-call duty. The operational bugaboos of private practice (insurance, billing, purchasing, hiring, certification, etc.) are outsourced to one centralized office. Employees at each clinic are rewarded every month with bonuses based on metrics like the rate of day-later follow-up calls (Irwin expects 100%).
With the UCCs providing 160 million visits annually for $16 billion in annual revenue, we’re seeing equity investments in the UCC chains. Humana owns Concentra, Dignity Health owns U.S. Health Works, Sequoia Capital and General Atlantic own MedExpress, and Enhanced Equity Funds owns NextCare. And, predictably, hospitals are moving into the UCC market (see Are Hospitals’ Days Numbered?) through development or acquisition (for example, hospital system Dignity Health paid two private equity partners $455 million for 172-clinic U.S. Health Works in 2012.)
But, I think the urgent care phenomenon may be an intermediate step in the redesign of urgent care in the U.S. Many of the conditions that are the financial bread and butter of UCCs can be addressed just as effectively using ehealth tools. And as medical homes become more advanced in their use of technology to engage patients, the demand for and margins of UCCs (a model that needs 30 patients a day to breakeven) may feel the pinch.
For more on the move to community-based care, don’t miss the session Community-Based Treatment Through Technology: Remote Monitoring, SmartHomes & More, featuring Greg Wellems, Chief Operating Officer, Imagine!; Trish Cavestany, Director, Clinical Products and Operations, Robert Bosch Healthcare Systems, Inc.; Adam Hanina, Chief Executive Officer, Ai Cure Technologies; and my colleague Sun Vega, at the 2014 OPEN MINDS Technology & Informatics Institute.