Dec. 4—Hospitals could save up to $8.5 billion by broadly adopting a specific approach to observation status care, according to new research.

Michael A. Ross, professor of emergency medicine at the Emory University School of Medicine in Atlanta, and his colleagues studied the four types of care most hospitals utilize when assigning patients to observation status and concluded that hospitals may be underutilizing a particularly cost-effective approach.

The study’s authors divided observation status care provided at U.S. hospitals into protocol-driven observation units directed by the emergency department (ED); observation units typically based in the ED and directed by a range of specialists; protocol-driven units with beds in any location referred to as a “virtual observation unit;” and those that use beds in any location with unstructured, discretionary care.
Previous research on the least-used type for observation status care, called type 1, has found it is associated with better outcomes, lower costs, shorter length of stay, and better clinical outcomes.

The study by Ross, director of the type 1 observation unit at Emory University Hospital, and his colleagues compared 2010 data from a case study of observation units in Atlanta, statewide discharge data, and national survey and discharge data. It concluded that patients in type 1 observation units have a 23 to 38 percent shorter length of stay and a 17 to 44 percent lower probability of subsequent inpatient admission. Such outcomes would produce also provided $950 million in potential national cost savings each year. 

But the savings were limited by the availability of type 1-level care at only one-third of U.S. hospitals. The possible savings could grow to $5.5 to $8.5 billion annually if the 11.7 percent of short-stay patients who qualify for such care were treated in type 1 units, according to the study.

“Widespread adoption of type 1 observation units has tremendous potential to provide cost savings to patients, hospitals, and payers,” the authors wrote. “The units give ED physicians the opportunity to provide the right level of treatment to the right patient in the right setting, thereby reducing the proportion of inpatient admissions.”

Publication Date: Wednesday, December 04, 2013