Last week my partner, Dr. Royer, wrote a blog on the “Role of the
Emergency Department.” In his blog, he noted writing a paper 30
years ago titled “The Emergency Department is the Front Door of
the Hospital.” I found this ironic on several different points.
First, several months ago the Rand Corporation released a report, “The
Evolving Role of Emergency Departments in the United States.” One
of the findings in the report – “EDs have become an important
source of admissions for American hospitals.” I’m not sure
if this should be characterized as a blinding glimpse of the obvious or
attributed to young authors conducting the study. So while some of the
findings were very similar to Dr. Royer’s observations 30 years
ago, some of the findings are relevant in seeing how the ER is evolving
within the changing healthcare delivery environment.
For my entire career in healthcare (over 35 years), Emergency Department
care has been proven, reported, analyzed, and quantified as “expensive/high
cost” care. According to the study, “EDs provide 11 percent
of all outpatient visits and are the portal of entry for roughly half
of all hospital admissions; however, they account for only 2-4 percent
of total annual health care expenditures.” Part of what has contributed
to the “belief” EDs are high cost is the high percentage of
uninsured that use the ED as a source of primary care and the related
cost of uncompensated care being provided. In addition, compared to alternative
urgent care delivery sites, hospital ED charges are typically much higher.
A more recent contributing factor is the higher level of technology being
utilized in the ED, including CT scans and cardiac monitoring. Because
of this advanced technology capability, it is possible the ED is becoming
more of a “gate-keeper” function in preventing costly inpatient stays.
Because of growing wait times and crowded EDs, every organization where
I’ve worked has attempted a variety of techniques of removing the
non-emergent patients from the ED (as Dr. Royer pointed out in his blog)
to more appropriate care settings. Unfortunately, this has proven to be
easier planned then executed. So what’s really going on?
As often is the case in today’s complex healthcare environment, conflicting
factors emerge which negate well intended initiatives and strategic plans.
For example, while on one hand efforts have been taken to move patients
to different delivery sites, managed care contracts have created the use
of the ED as a “clearing house of sorts” for patients previously
admitted by physicians directly to the hospital. In addition, the ED has
become the backup for the physician office on weekends and after hours.
The study found “office-based physicians increasingly rely on EDs
to evaluate complex patients with potentially serious problems, rather
than managing these patients themselves.”
Opening the first facility in Flower Mound, Texas (suburb of Dallas) in
2002, First Choice Emergency Room operates freestanding, fully equipped
emergency rooms in Texas and Colorado. They are JCAHO accredited and rank
in Press Gainey’s 95th percentile of ERs in the United States. They
recently opened their 24th facility in Arvada, Colorado. In 2012, the
company generated $78.2 million in revenue. So as Dr. Royer mentioned
and others have also suggested about alternative, non-emergent sources
to alleviate the wait time at hospital ERs, a look alike provider has
emerged that is non hospital based. Is this one of the “rebar-like
disrupters” we’ve previously blogged about? As Dr. Royer suggested,
a lot of business ends up in the ED that doesn’t need to be there.
What happens when the ED business that is in the ED but does not need
to be admitted to the hospital all of a sudden doesn’t show up in
the ED? Does the culling of ED business open the door for new competitors
with newer, cheaper, more efficient technologies? Stay tuned.
And finally, the report reflects “60% of all inpatient admissions
of Medicare beneficiaries enter the hospital through the ED and 3 out
of 4 uninsured patients are admitted from an ED.” As Medicare becomes
more precise about the price they want to pay, where the ED Medicare beneficiary
ultimately ends up may depend on the capabilities of the ED department.
Again, the rapid changes in the environment require equally rapid changes
in organizational abilities.
In summary, in case you haven’t heard, Steve Ballmer is stepping
down as CEO of Microsoft. According to the financial analysts that follow
Microsoft, this is partly because the Board wants Microsoft to become
more innovative. As a student of Peter Drucker, I leave you with this
thought from his book, Management Challenges for the 21st Century:
“Every institution-and not only businesses- must build into its day-to-
day management four entrepreneurial activities that run in parallel.
One is organized abandonment of products, services, processes,
markets, distribution channels, and so on that are no longer an optimal
allocation of resources. Then any institution must organize for systematic
and continuous improvement. Then it has to organize
for systematic and continuous exploitation, especially of its successes.
And finally, it has to organize systematic innovation, that is, create
the different tomorrow that makes obsolete and, to a large extent, replaces
even the most successful products of today in an organization. I emphasize
that these disciplines are not just desirable; they are conditions for
Challenges unchanged for 30 years may reflect not enough innovation is
occurring in our hospitals.