Freestanding EDs Can Make Providers Healthy

You’ve heard the horror stories. A California man with a blood disorder dies after more than seven hours of waiting in a hospital emergency department. A pregnant 25-year-old Las Vegas woman with abdominal pains languishes in the local ED for more than six hours without being seen by a physician, returns home in frustration and loses her baby. A 63-year-old Philadelphia man with breathing problems dies in a hospital waiting room after being diverted from the overcrowded ED.

Sadly, these tragic stories are all true, ripped from newspaper headlines during the past year.

Clearly, these sensational tales are rare exceptions to the routinely high level of care delivered by most EDs. Yet they draw attention to the fact that emergency care providers face a mounting set of challenges. The most pressing include overcrowding, growing patient wait times, inadequate facilities, limited capital, and deteriorating work environments for physicians and staff.

There’s no magic bullet that can fully address the difficult issues confronting today’s EDs. But there is a concept that appears to be a step in the right direction. It’s called a freestanding ED, and it is an idea that is gaining credence nationwide.

Trouble in the ED

Historically, providers have delivered emergency care on their campuses in dedicated EDs attached to an acute care hospital. But traditional methods of emergency care face numerous challenges.

An “ED paradox” has arisen during the past 20 years. The demand for emergency care has increased by more than 30%, yet the number of ED beds has decreased by 20% and the number of inpatient beds has decreased by more than 20,000, according to the American Academy of Emergency Medicine.

More recently, from 1996 through 2006 (the most recent year for which data is available), the annual number of ED visits increased to 119.2 million from 90.3 million?a 32% jump. That’s according to a 2008 report from the Centers for Disease Control and Prevention.

It is also reasonable to assume that ED patient volumes have continued to increase—and perhaps even accelerate—since that 2008 study. The proportion of ED patients without health insurance was rising even before the recession. So as unemployment increased and laid-off workers eventually lost their health insurance, it is plausible to suspect that even more patients have been forced to turn to EDs for routine healthcare.

Although it is anticipated that healthcare reform will reduce the ranks of the uninsured, that will probably only slow?not stop?the pace of future ED volume increases. Granted, it is anticipated that 32 million additional Americans will obtain medical insurance by 2014, which will presumably reduce their reliance on EDs for routine healthcare. But the overall population will continue to grow, which will probably result in a corresponding increase in non-routine ED visits.

Anyone with a basic understanding of economic theory might also reasonably conclude that increased demand and decreased supply have combined to put significant stress on the emergency care system, and they would be right.

Most visibly, patient wait times have increased. As noted, the dramatic examples cited above are in the extreme. But there’s no denying that ED patients are waiting longer for care. The mean (average) wait time for ED patients steadily increased from about 38 minutes in 1996 to about 47 minutes in 2004 to nearly 56 minutes in 2006, the CDC study found.

Those results were skewed by some very long waits, the CDC report points out. But the median wait time was still 31 minutes in 2006 (meaning half of patients waited less than 31 minutes and half waited longer). Meanwhile, access to care has declined. The number of hospital EDs decreased to 3,833 in 2006 compared to 4,109 in 1996, the CDC reported.

Hospital EDs have also become increasingly crowded. A 2009 analysis by the advisory services firm Avelere Health found that 47% were “at capacity” or “over capacity.” The heaviest load was found at teaching hospitals, where 73% reported that they were at or over capacity. Urban hospitals were at 65%, non-teaching hospitals 42% and rural hospitals 31%. The analysis was based on 2007 American Hospital Association data.

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: