Emergency departments need aggressive management.

Emergency Departments Need Aggressive Management

Medicare's prospective pricing system has fostered much cost-consciousness in hospitals regarding inpatient activities. But hospital managers must also examine other activities in search of opportunities to decrease expenses. Managers can minimize the large loss potential in emergency departments by developing detailed protocols and ensuring their consistent application through well-trained employees. This is particularly true for emergency departments having especially acute loss potential because of the volume of care provided to indigents.

Because indigents(*) tend to seek care later in the course of their illnesses and to use emergency departments (EDs) more frequently than their insured counterparts,[1] hospitals operating in areas having a high percentage indigent population will often provide significant quantities of services for payments 25-100 percent below established charges. In some areas, even Medicaid payments (which are closer to the 25 percent below charge end of the spectrum) fall below long-term average costs and produce accounting losses. And a higher incidence of indigent services may result in negative cash flow (i.e., not only cause accounting losses but also fail to cover even variable costs). In addition to potential losses from ED care of indigents, hospital managers must view their ED as an entry point for inpatients whose admissions may result in further losses. In extreme financial situations, managers may attempt to prevent such losses by closing the ED, eliminating much indigent care. The discussion that follows addresses the facility that desires to maintain a viable, medically effective, but low-cost ED rather than no ED. The key is to establish policies that minimize the economic risk associated with indigent patients by ensuring their care consumes neither too many nor too few resources. When any patient presents to the ED for evaluation, the possible result can be either (1) a hospital admission or (2) ED care without admission. It is possible to decline to evaluate certain classes of patients, but such a refusal of care (whether based on financial status or type of illness) carries unacceptable risks of subsequent legal action by patient, family, or government.[2] It is easily argued that all patients who present to the ED must be evaluated by medical personnel. Some hospitals believe their triage nursing staff is fully adequate for this purpose. Other managers will recommend physician evaluation of all patients presenting for care. The choice of who will provide this initial evaluation has implications for both staffing patterns and operational costs (i.e., costs for contract ED physician services should be less if hospital policy provides for triage nurses to evaluate and refer indigent patients). Regardless of who provides this service, appropriate medical triage will foster delivery of care to true medical emergency patients while nonurgent patients are referred to other treatment facilities. The initial evaluation may be as simple as collecting vital signs or other objective data and asking the patient to describe his or her complaints. But the facility without a standard protocol guiding ED personnel will risk the consequences of variability in the handling of indigents. Such variability can be perceived as discriminatory if sometimes ED physicians see all patients and at other times uninsured patients are seen only by nurses. Absent a standard protocol, not only will evaluations be variable, but so too may be the ensuing diagnostic and therapeutic intervention (as well as the cost of the resources consumed). This variability in performance can be eliminated by formulating policy, establishing procedures concerning triage, and educating employees concerning the importance of consistency in performing this task. These policies, procedures, and employee education programs should also include, at a minimum, the requirements of the Joint Commission on Accreditation of Healthcare Organizations and of COBRA in effecting a transfer.[2-3] Once the patient has been evaluated and treatment deemed necessary, guidance from management will help prevent unnecessary "total care" (i.e., the extensive evaluation and care that most physicians are trained to deliver). Without policies supporting a limited care approach, ED employees may feel obligated to provide maximum care, or care beyond what is medically necessary. Limiting the utilization of resources in caring for a no-pay (or low-pay) patient will limit the losses incurred in such care. Protocols that support first aid, stabilizing therapy, care of conditions likely to deteriorate, and care of clearly unstable patients are medically (and economically) sound. But policy is also sound if stable chronic conditions (e.g., mild hypertension), undoubtedly nonlife- or limb-threatening acute conditions (e.g., external ear infection), or concurrent medical conditions (bladder infection in a patient with an arm laceration) are not treated. EDs may have legal obligations to assist patients in finding providers for these problems (e.g., providing a list of telephone numbers of free clinics), but, generally, further care is mandated only as a matter of institutional policy. For example, such a mandate might be the consequence of a choice by the institution to espouse such care as a philosophical tenet, albeit expressed as an ethical duty. Absent such tenets, clear management guidelines can serve to encourage consistent ED care of all patients, minimize losses associated with indigent care, and avoid the perception of arbitrary treatment of financially needy patients. Because errors of commission can be caused only when care is delivered, and it is reasonable to assume that more care increases the chances of such an error occurring (or being perceived to have occurred), delivery of only necessary care should minimize the risk of these types of malpractice accusations. Policies must also be developed for the more complex patient who requires extensive medical intervention and admission. In some hospitals, these patients are treated for prolonged periods in the ED, with the hope of avoiding the "losses" attendant to admission. These facilities hope that minimal ED treatment and discharge home, or transfer to another facility, will justify the ill-defined "brief" stay in the ED. But extended care in the ED utilizes specialized resources that, in many cases, cost more to provide than standard inpatient care, resulting in additional costs (losses if the patient is nonpaying) that would not have occurred had the patient been admitted. The lack of a cost accounting tradition in hospitals, coupled with a natural tendency in provider organizations to assume (invariably incorrectly) that charges are somehow proportional to costs, results in serious misconceptions as to the actual costs of resources incrementally consumed in providing care in one form versus another. ED charges may thus be less than inpatient charges for care of the indigent patient, but the cost to the provider for this ED care may actually far exceed inpatient resource utilization. In addition, EDs that care for "medically admittable" patients for extended periods engender other risks. Dissatisfied nurses who consciously choose to avoid chronic care of inpatients but are forced into intermediate-term care of the patient "admitted" to the ED may seek out facilities where such practice is prohibited. Forcing an insured patient to share ED resources (i.e., nurse and physician time) with the extended stay indigent is the antithesis of achieving basic marketing objectives. And indigents who feel mistreated as a result of prolonged periods in an area with little or no privacy, quiet, or other physical comforts may initiate legal action. Holding patients in the ED pending transfer might save a hospital extensive losses, as in the case of a seriously ill patient who as an inpatient would utilize extensive resources. Unfortunately, these patients are not easy to transfer. First, the receiving hospital is most frequently a public-sector institution, and public hospitals are typically overcrowded and frequently unable to accept transfer.[4] Second, prior acceptance by the receiving physician is mandatory under COBRA regulations.[2] Because receiving physicians at public hospitals are frequently residents in training, they may require some otherwise unnecessary testing and treatment be performed by the transferring hospital before accepting the patient. Third, such patients are often the least appropriate to remain in an ED even temporarily from a medical (and medical liability) perspective. Because delays in their care (associated with transfer) of three to five hours are not uncommon, because transfer itself involves some risk (as many as 20-38 percent of these patients may deteriorate in transit[5], and because responsibility for the patient during transport clearly lies with the referring facility, referral for economic reasons is associated with a significant risk of potentially large losses.(**) Eventually, every hospital is likely to examine its ED as a potential source of economic losses. This will involve weighing potential benefits of a full service ED (and resultant net contribution toward, or increase in uncovered, overhead) versus the benefit of eliminating the mechanism through which significant numbers of low-paying (or nonpaying) patients enter the hospital. In theory, the ED could capture market share of nonindigent patients whose admissions are significant contributors to the facility's fiscal health, but it is also possible that the down side of ED indigent care may be even more significant. The managers of EDs faced with large Medicaid and indigent populations can reduce losses (or at least the potential for losses) and hence the possibility of ED closure by providing ED employees with unambiguous, consistently enforced policies on appropriate medical triage and care of all ED patients. (*)Throughout this article, the term "indigent" is used to refer to the patient who is uninsured, or partially insured, and who has inadequate personal resources to allow the provider to expect payment directly from the patient. This group will include the Medicaid patient, who in essence is partially insured and who by definition has no personal resources with which to pay the provider. (**)Potential losses from legal actions of all types are difficult to access. In a 1973 study, the then U.S. Department of Health, Education, and Welfare found that 14 percent of closed claims above $500 originated in the ED. Other researchers have estimated ED responsibility for all claims to be as low as 0.07 percent. Average settlements for closed claims vary from region to region, and local information should be used in evaluating the potential losses from liability claims. Causes of professional liability action included "failure to examine properly" in 82 of 200 consecutive cases reviewed, and "failure to order proper diagnostic studies" in 48. But once care is initiated, "improper treatment" is involved in 51 of 200 cases of malpractice, "failure to admit" in 87, and "failure to interpret diagnostic studies" in 63.[6] References [1]Enthoven, A., and Kronick, R. "A Consumer-Choice Health Plan for the 1990s: Universal Health Insurance in a System Designed to Promote Quality and Economy (Part 1)." New England Journal of Medicine 320(1):29-37, Jan. 5, 1989. [2]Consolidated Omnibus Budget Reconciliation Act of 1986, 42 USC Section 1395 dd (West Supp. 1987). [3]"Documentation of Compliance with Emergency Services Standards." JCAH Perspectives 7(7-8):1,3-5, July-Aug. 1987. [4]Koska, M. "Indigent Care and Overcrowding Threaten EDs." Hospitals 63(14):66,68,70, July 20, 1989. [5]"Interhospital Patient Transfer: The Case for Informed Consent." New England Journal of Medicine 319(10):643-6, Sept. 8, 1988. [6]Trautlein, J., and others. "Malpractice in the Emergency Department--Review of 200 Cases." Annals of Emergency Medicine 13(9 Pt. 1):709-11, Sept. 1984.

Hugh W. Long, PhD, is Associate Professor of Health Care Management, A.B. Freeman School of Business, Tulane University, New Orleans, La. Richard M. Lauve, MD, is an Instructor of Medicine, Louisiana State University School of Medicine in New Orleans, La., and an MBA student at Tulane University's A.B. Freeman School of Business.