Freestanding emergency departments target high-income areas, report says

Freestanding emergency departments are a fairly new phenomenon in healthcare, with standalone centers cropping up around the country, but where they tend to locate can be telling. According to a new analysis published in Health Affairs, these freestanding EDs tend to locate in areas that could yield high profit rather than in areas in which demand is high.

Although 32 states have such EDs, the focus of the study was in Texas, where about half of the nation's freestanding centers are located. Texas was one of the first states to offer regulatory guidance that provides a favorable environment to these types of EDs; for instance, while a freestanding ED in Texas requires a license to operate, there is no Certificate-of-Need program in the state. Also, in Texas they're not required to function under a hospital's license.

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Importantly, the findings pertain to unaffiliated EDs, not satellite EDs that are affiliated with a larger hospital system.

In Texas, freestanding EDs tend to be clustered around major metropolitan centers such as Houston, Dallas-Fort Worth, San Antonio and Austin. Geographic areas with these EDs had significantly higher income than those without them -- $91,563 versus $66,825.

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What's more, geographic areas with freestanding EDs also had some clear differences in their payer mix compared to areas without them. The proportion of insured residents was 5.6 percentage points higher in regions with freestanding EDs compared to those without such EDs, and a greater proportion of residents in the former had private insurance. By contrast, the proportion of Medicaid-covered residents in areas with freestanding EDs was quite a bit lower.

By way of explaining why hospital-affiliated satellite centers don't follow the same pattern, the authors suggested it may be because they can receive reimbursement from public payers such as Medicare and Medicaid, giving them less of a need to locate in areas with higher household incomes. Another possible reason is that hospital system's satellite facilities may in some cases function as "feeders" for the larger hospitals, prompting owners to place them far from the main campus in order to attract a distinct share of patients.

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While independent freestanding EDs aren't reimbursed by Medicare or Medicaid, some owners of these facilities have recently been seeking access to these patients, according to the report, in part by pursuing recognition from the Centers for Medicare and Medicaid Services, or transitioning to micro hospitals.

The authors contend that if policymakers want to allow these centers to receive federal reimbursement, they should make it mandatory for these ERs to report ED quality data to Hospital Compare. That would allow future researchers to compare their quality and overall value.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com