Alarming Rise in Freestanding Emergency Departments

Related topics: Healthcare Costs, Urgent Care
February 16, 2016

Alarming Rise in Freestanding Emergency Departments

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Since 2009 the number of freestanding emergency departments (FSEDs) has more than doubled from approximately 200 to nearly 500.  Yet, during the same period, there has been widespread reporting on the overuse of expensive emergency room (ER) care, and many provisions were built into the Affordable Care Act to incent plans and providers to adopt programs that provide lower cost alternatives to ER use for patients. 

ER Overuse

Lack of convenient and timely access to medical services for many Americans has driven up healthcare spending due to a systematic overuse of high cost emergency departments. Estimated annual waste from unneeded emergency room visits is $38 billion according to a New England Health Institute study. While much of the focus of this problem has been on the uninsured, studies show that ER overuse is on the rise across all patient populations, irrespective of age, ethnicity or insurance coverage. Lack of timely access to primary care services, convenient after-hours and weekend care, and the desire for immediate reassurance about a medical condition are the main drivers of ER overuse. An analysis by Truven Health of the top reasons for ER visits revealed that 66% could have been treated in a primary care setting.

Cost of ER vs Primary Care

Many studies have been performed to detail the cost differences between primary care, urgent care and emergency care delivery.  According to a 2010 report by Medica Choice Network, ER treatment for nine common non-emergent conditions typically costs between four and six times more than receiving the same treatment from an urgent care facility:

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FSEDs Access vs. Profit

Early FSEDs were built by hospital systems largely to serve rural and underserved populations.  They were seen as lower cost alternatives to operating hospitals in areas where hospital profitability was not sustainable.  More recently, the industry’s growing emphasis on patient convenience has fueled a trend to locate FSEDs in affluent suburban neighborhoods where patients value shorter drives and reduced wait times.  Because FSEDs are not covered by Medicare and Medicaid, operators of these centers are catering to the convenience-oriented privately insured population, many of whom have little understanding of the financial impact of their health care choices.  As this population is the least likely to suffer from lack of healthcare access, the rise in FSEDs is doing little to address the access issues that face rural and newly insured Americans. 

Deceptive Marketing – Buyer Backlash

Many consumers aren’t fully aware of the difference between urgent care facilities and FSEDs.  Plus, the rise of independent vs. hospital-run FSEDs in some states blurs the line even further.  Texas based Adeptus Health has opened 63 independent FSEDs across Texas, Arizona and Colorado under the First Choice brand name.  According to a multi-month investigation into FSED billing practices by 9News Denver the number of FSEDs in Colorado has risen from 2 in 2012 to 35 in 2016. There are few regulatory barriers to entry in Colorado where, unlike some other states, FSED operators do not need to obtain a Certificate of Need and operators are able to charge hefty facilities fees to justify 24-hour care. 9News reviewed many complaints from patients who thought they were going to an urgent care facility then received giant bills.  For example, a deck builder from suburban Denver went to a First Choice clinic for a splinter and ended up with a bill for $3,690.  Another woman visited a First Choice clinic for shortness of breath and was told there was nothing wrong with her.  She received a bill for $6,237.  As a result of these and similar stories, states are looking closely at the FSED model to determine how to deliver greater pricing transparency and whether additional regulation is required.

Alternatives for Non-Emergent Care Delivery

The rise in FSEDs signals an unmet need for access and convenience in our healthcare delivery model but begs the question of how to best satisfy that need.  With 60-70% of ER visits non-emergent, does it make sense to build more and more high-cost ERs or are there better, more cost-effective ways to provide this care?  In fact, there are an increasing number of alternatives being tested across the country to help patients get convenient access to care.  In addition to urgent care facilities and retail clinics, there is a growing trend towards telemedicine that allows patients to contact medical professionals 24 x 7 to get answers to their questions and determine if an ER visit is required.  Some of these initiatives are nurse-driven medical hotlines, while others enable round-the-clock access to a primary care physician.

As a nation, we need to address the crisis of skyrocketing healthcare spending. FSEDs, while convenient, only exacerbate the spending problem when used to treat non-emergent conditions.  Instead, we need to be investing in solutions that more cost-effectively address the need for expanded access and convenience.  For more information, read our white paper, “The Evolution of Consumer Driven Health Plans: From Cost Shifting to True Healthcare Consumerism.”

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