Newsletter and Subscription Sign Up
Subscribe

ERs Compete Head-to-Head

Published Friday Oct 26, 2018

Author Melanie Plenda

This spring, Portsmouth Regional Hospital announced the opening of its second freestanding emergency room (ER) next year on Central Avenue, just under three miles from Wentworth-Douglass Hospital and its attached ER.

“This new freestanding emergency room’s location … will provide short wait times for residents, as well as continued economic development and employment opportunities to this growing city and will continue Portsmouth Regional Hospital’s tradition of quality patient-centered care for the Seacoast communities,” wrote hospital CEO Dean Carucci, in an emailed statement. He declined requests for an interview.

While Portsmouth Regional Hospital, a for-profit hospital owned by HCA Healthcare, didn’t raise many eyebrows when it opened its first freestanding emergency department (ED) in NH last year in Seabrook, as there was no ER in that community, the Dover facility is making waves at nearby Wentworth-Douglass Hospital.

“I think the question is, how does that affect patients?” says Gregory J. Walker, president and CEO of Wentworth-Douglass Hospital. “Emergency rooms are very high cost places to receive service. They are over double the cost of an urgent care center. Our strategy is to provide multiple [urgent care] sites closer to home where people can get care at a lower cost. When you look at the for-profit chains, their big strategy is to create freestanding emergency departments because they are very profitable, and it really maximizes their shareholder value.”

National Trend
While the Dover site will mark only the second stand-alone ED in the state, it is part of a growing national trend.

Between 2008 and 2016, the number of hospitals with stand-alone EDs jumped 97 percent, according to a June 2017 report to Congress from MedPac—the Medicare Payment Advisory Commission, a nonpartisan legislative branch agency that provides the U.S. Congress with analysis and policy advice on the Medicare program.

In 2016, there were at least 566 stand-alone EDs operating nationwide. Typically, these facilities come in two forms: hospital-affiliated, off-campus EDs, which make up about 64 percent of all stand-alone EDs; and independent, nonhospital-affiliated, freestanding emergency centers. According to MedPac, stand-alone EDs often compete with urgent care centers and physicians’ offices for low-acuity patients or those with less-serious ailments.

Despite the prevalence of hospital-affiliated stand-alone EDs, only about 6 percent of hospitals nationwide have at least one, MedPac found, but the ones that do have them tend to be urban, relatively large facilities affiliated with a health system. MedPac found that most of these hospitals operate only one stand-alone ED, but about 30 hospitals on the list had multiple stand-alone EDs.

Why Stand-Alone EDs?
MedPac found that the local health care marketplace determines where hospitals chooses to locate their stand-alone ED. For example, a hospital may open one to expand access in areas that lack ED services, thus relieving overcrowding in its on-campus ED.

To make this determination, developers  use data-driven real estate analyses to identify “voids in community health care delivery systems,” according to MedPac, with developers focusing on varying factors like location of other EDs, population growth, household income, and insurance coverage in the target area’s population. The result is that EDs end to be located where there has been recent population growth, and they are typically built or opened within five to 10 miles of the hospital operating them.

In a press release issued in May announcing the launch of the ER in Dover, Portsmouth Regional Hospital noted, “Dover is one of the fastest-growing residential communities in New Hampshire and is a commercial center with more than 30,000 employees in the area each day. Increased health care capacity offered by the Dover ER will support both residential and workforce populations.”

MedPac authors wrote in their 2017 report to Congress, “We also observed that sometimes these facilities are located in urban areas close to other hospital EDs or stand-alone EDs. In cases where these facilities are located close to other ED providers, it appears the developers’ intention is to capture market share from competitors.”

“According to industry representatives, stand-alone EDs are a mechanism that hospitals and health systems can use to capture patient market share and control patient service use. Spokespeople assert that stand-alone EDs offer hospitals and health systems a way to extend their service areas into their competitors’ service areas,” the report continues.

Greg Baxter, chief medical officer of Elliot Health System in Manchester, says it makes sense to do that from a business perspective since, the ER is the entry point for many hospital admissions. “If you look at hospitals, specific to their operating margin, a large chunk of that comes from unscheduled care in inpatient beds,” Baxter says.


Medical professionals transporting a patient to an operating room from Trauma 1 in the Elliot Hospital’s Emergency Department. Courtesy photo.


The strategy for hospitals looking to open stand-alone EDs is to redirect patients from other EDs to the freestanding one to help that hospital increase its downstream acute care inpatient admissions, says J. Tate Curti, senior vice president and COO of Southern NH Medical Center in Nashua.

Cost vs. Reward
Emergency departments are expensive to run, Baxter says, because they are stocked with pricey equipment and highly trained—and thus, highly paid—practitioners and technicians. “The biggest cost to provide the service is labor,” says Baxter. “We have to be ready on a moment’s notice to treat anybody, and we’re open 24 hours per day. Even when it’s quiet, you still have to have staff.”

The cost of keeping the hospital lit and staffed is baked into the costs of an ED which then get passed on to customers. So even though it’s expensive to run an ED, it can also generate revenue. “Revenue comes to the ED, just like it would from any other department,” says Edward Duffy, an emergency department physician and interim CEO of North Country Healthcare in Littleton, an affiliation between Androscoggin Valley Hospital, Littleton Regional Healthcare, North Country Home Health & Hospice, Upper Connecticut Valley Hospital, and Weeks Medical Center.

If a hospital can have an ED that eliminates overhead costs for the building and real estate associated with a hospital, a freestanding ED becomes an attractive endeavor, Duffy says. “A freestanding ED in a strip mall, what’s their rent? $1,000 per month? $2,500 per month?” Duffy  says. “So, the overhead is low, the cost of the physicians is about the same to the employer, to the owner, and then the revenue they receive from billing out X-ray, lab, etc., is probably in the ballpark, although it’s a whole different economy because it’s not hospital-based—it’s profitable.”

In addition, many of these freestanding EDs are located in more-affluent areas where patients have better insurance coverage, MedPac found. Furthermore, freestanding EDs tend to attract patients with less serious issues, which means patients are in and out quickly using less time than would be spent on a more-acute case. (Although it should be noted, most freestanding EDs, including Portsmouth’s, advertise being equipped and able to handle acute care.)

“The reality is,” Walker says, “about 70 percent of the people who come to the ED don’t need to be here. They could seek care at an urgent care center and get it. So, it’s a very high cost setting for patients to go to.”

According to a study conducted by the Colorado Center for Improving Value in Health Care, in 2014 the average amount paid by a third-party insurer for a visit to a stand-alone ED for a patient with abdominal pain was $5,635 versus $151 for the same patient to visit an urgent care center. For a fever, it was $1,245 versus $136, and to get an open-finger wound fixed it was $1,035 versus $134.

The same is true for patients relying on Medicare to pay the tab for a trip to a standalone ER. Medicare does not cover costs for patients who visit a stand-alone ED unaffiliated with a hospital—a fact most patients don’t realize.

A 2017 study conducted by researchers at the University of Alabama found that each additional stand-alone ED in a county is associated with an expenditure increase of $55 per Medicare beneficiary.

“This finding suggests that even if [stand-alone EDs] may increase access to emergency care, it may result in higher overall Medicare expenditures,” the researchers found. Stand-alone EDs are reimbursed by Medicare for a facility fee, which is supposed to offset some of a hospital’s overhead cost, even though a stand-alone ED doesn’t have the same costs as a hospital-attached ED.

This is one of the reasons MedPac, this summer, recommended to Congress that they cut Medicare reimbursements by 30 percent for urban stand-alone EDs located within six miles of an existing hospital-attached ER in order to better align payments with costs.

“The recommendation would curb incentives to develop new [stand-alone EDs] near existing ... ED services, reduce cost sharing for Medicare beneficiaries served at [stand-alone EDs] close to on-campus EDs, and lower Medicare spending,” states a MedPac fact sheet about the June 2018 recommendation. As of the magazine’s deadline, Congress had yet to act on this recommendation.

Concerns About Care
Portsmouth Regional Hospital officials stress that free-standing EDs provide another health care resource for patients. “Portsmouth Regional Hospital is committed to providing health care access points in communities we serve. These access points—such as the planned Dover Emergency Room—function as extensions of the tertiary-level programs that Portsmouth Regional Hospital is synonymous with,” Robbins of Portsmouth Regional Hospital stated in an email to Business NH Magazine.

But Walker of competing Wentworth-Douglass Hospital says he’s concerned that this stand-alone ED will cause delays in care. “If a person goes to a freestanding ED and they require surgery, if they are having a heart attack and they require a stent, if they are having a stroke and require an invasive procedure, they can’t be treated at that ED,” Walker says. “They have to take a second ambulance to a hospital,” Walker continues, “They don’t have an operating room to do operations, they don’t have a cardiac catheterization on-site, they don’t have surgeons on call, cardiologists on call, so it’s really delaying care for critically ill patients who end up going to that choice by making a decision or the ambulance operator makes a decision by taking them there.”

While Carucci, through a spokeswoman, declined to comment on these claims, Portsmouth Regional Hospital sent a fact sheet about the proposed 10,000 square foot facility, which states the Dover ED will be a fully integrated department of Portsmouth Regional Hospital that will have approximately 11 treatment rooms, fully equipped trauma and behavioral health bays, and a separate pediatric waiting area and dedicated pediatric
treatment rooms.

The department, according to the fact sheet, will be staffed 24 hours a day by ER physicians as well as radiology and lab technicians. When it comes to equipment, immediate neurologist assessment will be available for stroke patients via Portsmouth Regional Hospital’s teleneurology program; instrumentation for full diagnostic laboratory testing and CT scan, digital X-ray and ultrasound will be available; and there will be emergency blood supply to transfuse trauma patients. The Dover ER project is expected to create 40 health care and support jobs, per Portsmouth Regional Hospital’s press release.

So what happens if a critically ill patient needs to be taken to a hospital for more extensive care? Would they be taken to Wentworth-Douglass Hospital nearby or to Portsmouth Regional Hospital, which is 10 miles away (an approximate 17-minute drive)? “It would be up to the patient or the patient’s health care proxy should they not be able to make decisions for themselves,” Lynn Robbins, Portsmouth Hospital’s spokesperson, replied in an email.

“As in any emergency room, the medical crisis is addressed, and the patient stabilized if possible, and the choice for continued care, when needed, is up to the patient.”

That said, the website for Portsmouth Regional Hospital’s Dover ER states, “Patients needing to be admitted to an inpatient bed will be transported to the main campus with seamless care handoff to our excellent intensivist and hospitalists.”

Walker is not convinced that Portsmouth’s move into Dover is about providing more choice for patients explaining that stand-alone ERs are not the ideal location for dealing with such serious medical issues as a stabbing or heart attack. “So really it’s about maximizing profits over giving patients choice,” he says.

Carucci declined a chance to respond to this assertion through a hospital spokesperson.

Benefits of Stand-Alone ERs
There are benefits to standalone ERs. Freestanding EDs are open and available when other options such as urgent care and walk-in or physicians’ clinics might be closed. They also can be access points to emergency care that otherwise might not exist or may prove to be closer than the nearest hospital ER.

“If a freestanding ED is dropped into a community that doesn’t have access to emergency care,” says Curti, “that’s additive, that’s creative, and I think it’s a benefit for all communities. If it’s dropped into an area where there is adequate coverage of emergency departments and good clinical coverage, I think we all need to ask ourselves if that is a responsible deployment of resources.” Curti notes he was not specifically commenting on Portsmouth’s strategy, saying he wasn’t familiar with what their strategy might be.

Stand-alone EDs can alleviate congestion in what are often overtaxed hospital  ERs, much in the way urgent care clinics have done. Curti adds about 41,000 patients are seen annually in Southern NH Medical Center’s ER. But combined with the patients treated at its urgent care clinics, that number is closer to 100,000 patients annually.


Emergency department at Southern NH Medical Center. Courtesy photo.


“Over the last few years, we have opened a number of immediate care sites to decant some of the pressure on the emergency department,” he says. “What we’re seeing now in the ED is a much higher level acuity of care than otherwise we were seeing, which in many ways is a good thing. There is a lot more infrastructure, medical and clinical infrastructure in an ED than in an urgent care. So, the design is working. In the last five to 10 years, we have seen growth in our emergency department, but we’ve also opened up these outlet sites, which have, we think, really saved our operation.”

And while Duffy of North Country Healthcare says he’s not concerned that stand-alone EDs will pop up in the North Country anytime soon, he does worry about the effect these operations might have on hospitals elsewhere in NH.

“Wentworth-Douglass is so well run, I’m sure they’ll come up with something. But it makes it harder every day,” he says.

All Stories