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Freestanding EDs Can Make Providers Healthy

By Keith Konkoli, for HealthLeaders Media, July 30, 2010

Finally, there is often no room for maxed-out EDs to expand. By definition, traditional hospital-based EDs are situated in hospital buildings on hospital campuses. For many “landlocked” urban campuses, that often means there is no opportunity to add capacity.

Opportunities for providers
But let’s put aside for a moment the growing array of challenges faced by ED care providers. Now let’s examine the strategic needs and opportunities many hospitals and health systems have identified in recent years.

For example, there is an attractive opportunity to provide more outpatient services. Outpatient care is the fastest-growing component of the U.S. healthcare system. It also tends to be more profitable for providers. Not surprisingly, the “outmigration” of care is seen by providers as far and away their No. 1 new business opportunity, identified by 33% of respondents in a recent Bank of America hospital survey. Cardiac care and physician joint ventures were a distant second with 15% each; followed by outpatient diagnostics and cash/retail businesses, 12% each; general imaging and general surgical, 8% each; sleep labs/disorders, 6%; and pain management, 4%.

At the same time, many urban providers seek to extend their brand and defend?or expand?their market shares in growing suburbs. Adding off-campus facilities also improves convenience and access to care for nearby patients and their families. Many providers are also looking for greater revenue diversity and growth, increased patient satisfaction, and better strategic alignment with their physicians.

Yet these needs and opportunities all come at a time when most providers are facing significant capital constraints at both the facility and system levels. Yes, the worst of the credit crunch is behind us. But capital remains more costly and difficult to obtain than it was only two to three years ago—and most providers don’t expect that to change anytime soon.

Thus many providers confront two separate challenges. On the one hand, they face the mounting difficulties associated with ED care. On the other, they must achieve their organizational objectives in an era of constrained capital. With the potential to alleviate both problems in a single stroke, is it any wonder that more and more providers are considering freestanding EDs?

EDs outside the box

Freestanding EDs, or FSEDs, are still an evolving concept. Due to the number of variables, it is difficult to define “emergency department,” let alone “freestanding emergency department.” But most providers would at least agree that freestanding EDs are healthcare facilities that deliver emergency services at a non-hospital-based (i.e., off-campus) location.

Beyond that, the characteristics vary. Although the vast majority of freestanding EDs are affiliated with hospitals or health systems, they might be treated as part of the system or as a separate legal and financial entity. In addition to emergency services, freestanding ED buildings can also include ambulatory surgery centers, laboratories, imaging centers, and primary care and specialty physicians’ offices.

The general concept of freestanding EDs has existed for decades, but its popularity has increased sharply in recent years. According to the AHA’s 2009 annual U.S. hospital trends survey, there were 191 hospital-owned freestanding EDs, not including independently owned and operated facilities. That represented an increase of almost 31% since 2005.

Why are freestanding EDs on the rise? More and more providers and private developers have begun using these facilities to directly address many of the thorny issues confronting emergency care while furthering their organizational objectives.

Although they are no panacea, freestanding EDs can:

  • Shorten ambulance and patient travel times to the ED
  • Reduce patient wait times
  • Provide greater access to care
  • Ease hospital overcrowding
  • Increase patient/customer convenience and satisfaction
  • Expand providers’ brands and market shares in growing suburbs
  • Address the “outmigration of care” trend
  • Grow and diversify revenue streams
  • Enable inpatient acute care facilities and systems to add services despite capital constraints
  • Reduce the physical cost and challenge of ED expansions and renovations
  • Support physician alignment strategies

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