Using observation units, hospitals could save $3.1B

BETHESDA, MD  -  Instead of admitting certain patients to the hospital, using dedicated observation units in hospitals can often be more efficient, result in shorter lengths-of-stay and lower costs, according to a recent study from Health Affairs.

"The wider use of observation units may create cost savings and should be a model for acute care redesign to increase value in the U.S. healthcare system," said the study's lead author, Christopher Baugh, MD, of Brigham and Women's Hospital.

Using a systematic literature review, national survey data and a simulation model, the study's authors estimated that if hospitals without observation units had them in place, the average cost savings per patient would be $1,572, the annual hospital savings would be $4.6 million and the national cost savings would be $3.1 billion.

Currently one-third of hospitals in the country have an observation unit, which is a dedicated space usually near or within an emergency department offering an alternative to an inpatient admission for many patients who cannot be safely discharged to their homes following an emergency department visit. In addition, patients who go to a hospital complaining of asthma, skin infections or abdominal pain or who have suffered mini-strokes often are placed in observation.

"Considering the fact that hospital care accounted for more than 30 percent of national health expenditures in 2009, efforts to improve healthcare efficiency need to focus on hospital efficiency," the authors wrote in their study.

The authors' objective was to quantify the potential cost savings from a decrease in avoidable inpatient admissions that would result from increasing the use of observation units in eligible hospitals.

"We feel we are able to send more patients home and keep patients out of inpatient care," said Baugh of Brigham and Women's use of observation units. "I think we have safer discharges. In the past, we were often forced to make risky decisions in sending certain people home from inpatient care, relying on their word that they'll go to follow-up appointments," he said. "Patients can get medications, stress tests, blood tests in the observation unit, and it's an outlet for patients that still need extra time before going home. It relieves the time pressure crunch that there often is in an ED."

Stephen Bohan, an author of the report and executive vice chair of Brigham and Women's Department of Emergency Medicine, said Brigham and Women's 10-bed emergency department observation unit sees about 500 patients a month with patients having a maximum stay of 24 hours in the unit. 

"Twelve to 15 hours is usually what is needed for patients in the observation unit and people are happy about this," Bohan said. "If a patient were to need more than 24 hours in the observation unit, we think he or she should be admitted into the hospital. This is really an efficient use of beds."

Michael Ross, medical director of the Emory University Hospital's emergency department observation unit, said having an observation unit is about "the right care for the right patient at the right place."

"One powerful benefit is operational improvement, and when we opened our unit, the number of patients who left the ED without being seen by a physician was cut in half."

The amount of resources needed in an observation unit is much less, said Benjamin Sun, emergency physician and health services researcher at Oregon Health and Science University, therefore cutting down costs for hospitals. Observation units also free up space in the often-overcrowded emergency departments or other inpatient units. 

"We can reserve inpatient beds for those who really need them," Sun said.