News | Payment Trends

Preventable ED Use Costs $8.3 Billion Annually: Analysis

News | Payment Trends

Preventable ED Use Costs $8.3 Billion Annually: Analysis

Feb. 8—An estimated $8.3 billion is spent each year on emergency department (ED) care that could be provided in another location, according to a new analysis.

The estimated cost of unnecessary ED care has nearly doubled from a 2010 estimate.


Feb. 8—An estimated $8.3 billion is spent each year on emergency department (ED) care that could be provided in another location, according to a new analysis.

The preventable spending on unnecessary visits by 17 percent of ED patients was identified by Premier and marked a significant increase from the $4.4 billion annual cost of such care as identified in a 2010 Health Affairs study .

“ED visits can be costly as they may lead to hospitalizations and other high-cost services,” said T. May Pini, MD, a principal at Premier.

Premier’s findings were based on an analysis of its 750-hospital database and focused on six chronic conditions—particularly behavioral health, diabetes, and hypertension—to identify patients who could have been treated in less costly settings. The projected cost was based on the $1,917 cost of an average ED visit, as estimated by the Health Care Cost Institute.

The increased ED use may be driven in part by the increasing prevalence of chronic and behavioral health conditions in the aging population. Half of adult Americans have at least one chronic condition, and more than two-thirds of Medicare patients have two or more, according to data from the Centers for Medicare & Medicaid Services.

The findings come as fee-for-service (FFS) payments comprise a shrinking—but still majority—share of hospital payments and as payers are driving hospitals to take on more risk. In a value-based payment environment, managing the cost of care for patients with chronic and behavioral health conditions is a critical area of focus for healthcare providers, the Premier report noted.

Under such models, preventable ED visits can lead to unnecessary hospitalizations and other high-cost services that erode savings opportunities and result in financial losses.

“It is widely known that people with chronic conditions contribute to high healthcare expenditures, making them a critical population for more strategic, preventative care,” said Joe Damore, a senior vice president at Premier. “Alternative payment models create an incentive for providers to organize high-value networks, such as accountable care organizations [ACOs], which deliver coordinated care across the continuum.”

But providers have had trouble addressing unnecessary ED use even in models where they are incentivized to do so. Premier found that among the 120 Medicare ACOs that it advises, about 30 percent of ED visits occurred for issues that could have been treated in primary or other ambulatory care settings.

Even hospitals and health systems paid through FFS Medicare face financial risks for unnecessary ED use through Medicare’s value-based purchasing and readmissions reduction programs, as well as the Merit-based Incentive Payment System for physicians.

Areas of Challenge

The biggest driver of unnecessary ED use, according to the analysis, is mental health care. Eliminating unnecessary ED use for mental illness could save about $4.6 billion annually.

“The average patient with psychiatric service needs directly costs an ED $1,198-$2,264 per visit, with many patients presenting dozens of times over a year,” the report stated.

The second largest driver was hypertension, which could result in $2.3 billion in savings if patients obtained care at more-appropriate, lower-cost settings.

Hypertension-related hospitalizations cost about $113 billion annually, and patients with high blood pressure generate 2.5 times more in healthcare spending than those without it.

Another $1.2 billion is spent on ED care for diabetes patients who could be cared for in lower-cost settings.

Hospital stays for patients with diabetes are longer and more likely to originate in the ED than those for patients without diabetes. Additionally, uninsured people with diabetes have 168 percent more ED visits than those who have insurance.

Effective Steps

Patients with multiple chronic conditions are generally under the care of multiple physicians. The report stated that alignment and care coordination strategies are needed with primary care physicians—including facilitating optimal patient engagement and education, avoiding unintended duplication of services or testing, and ultimately ensuring patients receive the right care at the right time and in the right place.

“To avoid disease progression and poor health outcomes, people with chronic conditions need more preventative and proactive care, including more reliable access to their primary care provider [PCP] for urgent issues,” Pini said. “However, the delivery of high-quality primary care requires significant transformation across acute, ambulatory, and community providers to align around a coordinated care management model that is truly focused on the patient.”

Although the report noted that there is no one-size-fits-all approach to clinical integration efforts that address patient needs for a given population, Premier identified several keys to building a unified care management model that is aligned with PCPs and that effectively coordinates care across the continuum.

The report stated that healthcare providers first must reach consensus on a shared vision, strategy, and infrastructure for supporting patients with chronic conditions.

Other keys to success include:

  • Implementing a multidisciplinary team-based approach to care coordination and management to ensure efficient and effective use of resources
  • Focusing on engaging patients and meeting their needs through shared goals, aligned incentives, transparent care plans, and integrated technology that supports workflows across all sites of care
  • Developing a strategy to identify patients who would most benefit from care management, using population segmentation/risk stratification algorithms

Other efforts in this area include a strategy adopted by Baylor Scott & White Health to reduce rising rates of ED use and inpatient hospitalizations in a low-income Dallas community.

The health system partnered with the Dallas Park and Recreation Department to create a level-three primary care clinic with integrated wellness and prevention programs in a city recreational center. The clinic, known as the Baylor Scott & White Health and Wellness Center, aims to integrate programs targeting the social determinants of health within a population health strategy.

ED care utilization by people who used the center’s services declined by 21 percent in the 12 months after initiation of services at the center, according to a study in Health Affairs. Additionally, their ED costs declined by 34.5 percent in that time frame.

“Evidence from this study supports the value of population health approaches that reach beyond the traditional health care system to provide health care that yields benefits for both the health system and the people and communities it serves.,” the authors of the study wrote.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare  

About the Authors

Rich Daly
HFMA senior writer/editor

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