The University Record, March 19, 1996
ER treatment may not be more expensive than after-hours care
By Debbie Gilbert
News and Information Services
Some HMOs and Medicaid programs are urging that hospital emergency departments send patients with non-urgent conditions-such as sore throats-off to private physicians in the belief that such care would be less costly.
A study from the School of Public Health, however, reports that the average actual cost of non-urgent care in the emergency department-$62-is similar to the cost of a visit to a private physician, and the marginal cost (the cost of providing care to one extra patient when the facility is already open and functioning) is only $24.
"This is significant because it means that unless the marginal cost for a doctor's office visit is $25 or less, it doesn't make sense from a cost perspective to send non-urgent emergency department patients to private physicians' offices," explains Robert M. Williams, adjunct lecturer and Agency for Health Care Policy and Research fellow at the School of Public Health. "It is possible that the marginal costs of a private physician office visit are less than $25 during daytime hours when offices are open, but it is unlikely that they are less than $25 at night, on weekends and on holidays.
"Moreover, one cannot assume that all patients have access to sources of care other than the local hospital," Williams adds. "Many inner-city and poor patients rely on emergency departments for health services. The cost savings may not be worth the risk of denying patients access to health care."
The study appeared in the March 7 issue of the New England Journal of Medicine.
Williams examined the costs of and charges to 24,000 patients who came to emergency departments in six Michigan hospitals, dividing them into non-urgent, semi-urgent and urgent visits. He found that the average cost of a non-urgent visit was $62 and the average charge was $124.
"One reason charges are double the costs is that approximately half of all emergency department charges go uncollected. Each paying patient thus pays not only for themselves but for another non-paying patient as well," Williams notes.
While this financing method may seem unfair, he adds, it is currently the only way for many emergency departments to stay open. "An obvious implication [of the study] is that per visit charges could be substantially reduced if a larger percentage of visits to emergency departments were covered by third-party payers, such as managed care plans or state Medicaid programs.
"It is important to note, however, that without an alternative financing mechanism or some type of universal insurance coverage, reimbursement for emergency department services on the basis of cost could severely compromise the financial viability of many emergency departments that currently provide services to uninsured patients."
Williams also found that:
The average cost of the semi-urgent visit was $159 and the average charge was $312. The average cost of an urgent visit was $351 and the average charge was $621.
Thirty-two percent of all emergency department visits were for non-urgent conditions; 26 percent were for semi-urgent conditions such as moderate injuries and illnesses; and 42 percent were for urgent conditions such as broken bones or chest pain.