November 14, 2006

Does Emergency Room Care Really Contribute to Rapid Healthcare Inflation?

Carroll Andrew Morse

Megan McArdle of Asymmetrical Information challenges emerging conventional wisdom that using emergency rooms for routine medical care is a significant contributor to rising healthcare costs (h/t Instapundit)...

It doesn't seem to me that emergency room care for routine ailments is actually more expensive to provide than clinical care; it's just that hospitals price it to cover the cost of dead, uninsured trauma patients and so forth. I don't see how a triage nurse, a doctor, and a waiting room are more expensive to provide because they're on the first floor than they would be on the fifth. But perhaps I'm missing something there.
Agree or disagree?

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I think the major expense of an ER is the cost of maintaining a full staff regardless of its need; scheduled visits are a far more efficient use of resources.

Posted by: Mario at November 14, 2006 6:30 PM

I just read in that lefty rag BusinessWeek that some hospitals are experimenting with giving indigents free primary care. The idea is to treat early, before it gets to expensive.

Mario offered one good reason for the extra costs. In addition, since people don't go until the problem is really bad, so there's a whole slew of tests needed to diagnose something that could have been prevented.

Based on that, I would say that ER care does jack up prices. And it seems that hospitals are in a better position to judge than Instapundit.

Posted by: klaus at November 14, 2006 6:48 PM

Mario and Klaus,

Those explanations donít add up. Itís true that staffing an ER 24/7 is going to be more expensive than staffing a 7-to-11 walk-in clinic, but the intensive ER staffing is going to occur anyway, whether people use it for routine care or not.

Think of it this way. Suppose I want to open a walk-in clinic, down the street from the ER, to reduce usage of the ER for primary care. What has been saved by drawing people away from the ER for their primary care needs? An ER is going to be as well equipped as any walk-in medical clinic, I think. And you could argue that, in pure economic terms, itís cheaper to provide care through a combined ER/primary care clinic rather than through two separate facilities, since the physical infrastructure (electricity, water, etc.) and some support services (janitors, receptionists, etc.) can be shared.

So where is the savings?

Posted by: Andrew at November 14, 2006 8:23 PM

I don't have any hard numbers to back this up, but Klaus' second point makes sense to me. If an uninsured person has no primary care provider, they are less likely to seek help if they have (to take a silly example) a chronic stomach ache. Let's say, for the sake of argument, the stomach ache is the result of an ulcer. If the uninsured goes to a clinic early on, it seems to me that it is a relatively quick and inexpensive fix. If, however, the uninsured does nothing until the ulcer burns a hole in the stomach (or whatever it is that ulcers do - I am not a doctor) and then goes to the ER, then the uninsured will need surgery, which is a significant cost that can be recovered by driving up premiums/costs for the insured population.

There are likely a host of variables involved that affect cost projections in a scenario like this. And if anyone can point me to where they might be, I am curious. But it has always been my understanding the preventive care is significantly less expensive and more effective.

Posted by: andy at November 15, 2006 10:59 AM
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