A Tale of Two Cities? ERs closing, innovating

As more Americans are visiting emergency rooms, the number of them around the country is dwindling. According to a recent Chicago Sun-Times article, the number of ERs in non-rural areas in the U.S. fell 27 percent between 1990 and 2009. That averages out to 89 closures per year. In Illinois, 23 hospitals and their ERs have closed since 1990. New York City lost three ERs over a three-year period that served close to 100,000 patients annually (New York Times – May 17, 2011).

This ER closing trend was recently highlighted in a study published in the Journal of the American Medical Association. The authors found that ERs at commercially operated hospitals and ones with low profit margins were almost twice as likely to close. Hospital ERs that served disproportionate numbers of Medicaid patients and a large poor population were 40 percent more likely to close and those in the most competitive markets were 30 percent more likely to close than others. While it is no surprise to hospital administrators that the ER is a cost center, just like other critical areas of the hospital operations (e.g. housekeeping, maintenance, etc.), the goal of how to make it less of a cost center in today’s dynamic healthcare environment should be the end objective.

While many ER operations around the country are closing, others are innovating and adapting to the markets they serve. North Shore-Long Island Jewish Health System is planning a 24-hour emergency care and ambulatory surgery center in Greenwich Village. This freestanding emergency room is being designed to meet the needs of the community it will serve, without having the cost structure of a full-service hospital attached to it.

In Florida, $9.99 buys you guaranteed, immediate entry in one of nine South Florida hospitals. Patients with non-life-threatening conditions can make reservations online for the next available appointment. If the patient is not evaluated within 15 minutes of the reservation time, the $9.99 is returned. According to the Los Angeles Times, Tenet hospitals in Florida are seeking to make money through their ER operations.
It is no secret that patients without health insurance are likely to end up in the ER to access services available in a non-hospital setting such as a physician’s office. Innovative approaches to address that issue are only one half of the equation. Without addressing the standard operational challenges of an ER, costs will continue to mount and revenue leakage will continue to occur. While the innovative approaches above are media-worthy, the core blocking and tackling of revenue cycle functions in the ER define a true success story.

For every patient that enters the ER for emergency services, there are a dozen others that enter for non-emergent care. It is this population of patients that can take a real toll on the cost to operate an ER. Throughput in the ER is a major complicating factor. Registrars and other patient access associates are asked to complete standard registration tasks in a condensed timeframe. As a result, registration mistakes can cause third-party denials on claims or allow unfunded patients to result in bad debt write-offs. If a standard registration approach is taken, wait times increase and patient satisfaction decreases.

Integrating data during key decision-making steps of the revenue cycle can minimize registration errors and identify funding sources for self-pay/indigent patients. Simply providing correct patient identifying information during a quick registration in the ER can significantly reduce denied claims. Using technology solutions, unfunded patients can be matched with entitlement programs (Medicaid, Victim of a Crime, Charity, etc.), which can be addressed by financial counselors post-treatment. Identifying and qualifying patients in the ER for Medicaid can significantly reduce bad debt for the immediate service and for future services to be provided throughout the health system.

Here we have two different types of ER operations on opposite ends of the spectrum. The ERs that are succeeding are adapting to the new healthcare environment and are delivering the services needed by the communities they serve. They are also embracing and leveraging technology and information at the most appropriate time for their processes. I am not suggesting that this ER business model is one-size fits all, but I think there are lessons that we all can learn on how the use of information at the right time in the equation can turn an ER operation into an asset for a hospital.

This tale of two cities does have a happy ending, because the data and process enhancements exist today that all ER operations and hospitals can take advantage of to improve their bottom line. The unknown in this tale is when this data will be leveraged – now or when an additional 35 million U.S. consumers are added to the health insurance rolls. Innovation may be media-worthy, but simple blocking and tackling may just save your ER.

James Bohnsack is vice president of TransUnion Healthcare.