A new kind of doctor’s office that acts like the emergency room you might find in a major hospital is gaining ground — and it’s worrying insurers.
The centers, known as free-standing emergency departments, offer a more convenient alternative to long wait times in a hospital’s emergency department or waiting for a visit with your regular doctor. Some are affiliated with hospitals, while others operate independently, sometimes with private-equity backing. Because of the centers’ emergency-room status, they’re able to bill insurers and individuals more than a standard primary-care or urgent-care visit, even if they’re treating a condition like a fever or infection.
Free-standing emergency departments have more than doubled over the past decade, growing from 222 centers in 2008 to 566 in 2016 according to a recent report from UnitedHealth Group. In states like Colorado and Texas, the model has been popular in wealthier areas. Elsewhere in the US, hospitals have been experimenting with building stand-alone emergency centers closer to where people live as a more convenient alternative.
Dr. Lisa Bielamowicz, the president of Gist Healthcare, which consults with health systems, told Business Insider that there are parts of suburban Texas where emergency departments — as well as urgent care centers— are conforming to the Starbucks model. That is, popping up across the street from one another or along the same road until the businesses start to see demand drop.
In some cases, some of the operators of free-standing emergency departments in Texas have filed for bankruptcy.
With “emergency” in the name, the centers don’t look all that different from an emergency room attached to a hospital, and because they show up in many the same places as urgent care centers, it can often be hard for consumers to tell the difference. But they can leave people on the hook for thousand-dollar bills for simple procedures.
For instance, a patient who came into a Houston-area center after experiencing dizziness racked up $15,000 in charges for what turned out to be fluid in her ears, of which her insurer expected her to cover more than $13,000, the Houston Chronicle reported in February. In Colorado, the family of a two-year-old found themselves on the hook for a $6,420 bill after taking her to a freestanding emergency center for a bump to her head, Colorado Public Radio reported in April 2018.
UnitedHealth Group and other insurers have been investigating the impact the centers have on patient care and spending. In UnitedHealth’s recent report, the healthcare giant found that centers in Texas were predominantly treating common conditions such as fevers and infections at emergency room prices, which are much higher than a typical doctor’s visit.
Should common visits shift out of the free-standing emergency department to a doctor’s office or urgent care center, the costs associated with that care would drop by 95%, the company said in its report. That amounts to roughly $800 million in Texas alone.
It’s happening at a time when patients are more on the hook than ever before for the cost of their medical care. In 2018, nearly half of Americans under 65 with private health insurance had high-deductible plans, up from about 25% in 2010. Those plans require a person to spend thousands out of his or her own pocket before their health insurance starts covering their care.
Free-standing emergency departments got a boost in 2009 when Texas passed a law that allowed for them to spring up in the state.
They’re staffed by doctors and can do a lot of the diagnostics that a hospital-connected ER can, but they’re not equipped to do all of it. Car crashes, strokes and other more serious illnesses and injuries still get transferred to the hospital.
“We put locations in convenient neighborhood communities and provide a high level of care to our patients with a short wait time,” Jennifer Martin, the digital marketing manager for Signature Care, which owns 16 emergency-room locations in Texas, particularly in Houston, told Business Insider.
The model takes a lot of education, too. Martin said that Signature Care make it clear when patients call that the center is for emergency care and acts just as an emergency room with emergency room-level prices.
According to an analysis conducted by UnitedHealth, the most common visits to free-standing emergency centers in Texas were for fevers, acute bronchitis, acute pharyngitis (otherwise known as sore throat), acute upper respiratory infections, and coughs. The company found that visits to the centers cost 22 times what a doctor’s visit would, and 19 times what an urgent care appointment would.
Under Texas law, insurers are required to pay for emergency care for their members, even if the place they get their care is out of network, keeping many of the free-standing emergency rooms in service.
Dr. Sabrina Poon, an emergency-medicine doctor at Vanderbilt University, has been looking into the different ways patients decide to get care, such as at urgent care centers and free-standing emergency departments.
“I’m stepping into it from a lens of trying to figure out why patients are going to these different venues,” Poon said.
As part of her research, Poon and her colleagues took a look at three instances of urgent care centers that had converted to free-standing emergency centers in Texas to get a sense of what changes those centers had to make. To be sure, there haven’t been many instances of urgent care centers transitioning into free-standing emergency centers, Poon said.
For the most part, the scope of visitors didn’t change at the three sites, and a lot of folks came in for the same conditions they would have if they were going to an urgent care center. But the centers were raking in a lot more money.
The median reimbursement for a visit to one facility jumped from $148 to $2,153. At another facility, revenues jumped from $637,585 as an urgent care site to $8,429,828 looking one year before and after the conversion, respectively.
“I think they provide good care but the question is, in this era of skyrocketing health costs, what can we do to keep the care affordable and make it better,” Poon said.
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