Freestanding EDs Associated With Increased Costs, Utilization in Local Markets

In areas of the country with overcrowded emergency departments (EDs), there has been a rapid rise in the number of freestanding EDs (FrEDs) to alleviate the burden on hospital EDs and improve access to care. For instance, FrEDs can help ensure access to care in rural areas where hospital closures have left communities with a lack of care providers.

However, while FrEDs, which offer emergency care without being physically attached to a hospital, do reduce wait times, they increase utilization and local market spending, according to new research published in Academic Emergency Medicine.¹

“Although past studies have documented the rapid growth of FrEDs in multiple states, there is only limited information about how entry of FrEDs has influenced overall spending on EDs and how much changes in spending are attributed to shifts in price versus utilization,” the authors noted.

They analyzed ED claims between 2014 and 2017 from Arizona, Florida, North Carolina, and Texas, and estimated the association between changes in the number of FrEDs and total spending on emergency care, out-of-pocket spending, utilization, and price per visit.

In a previous paper, 2 of the authors had analyzed the impact of FREDs in Texas.² They found that a total of 288 FrEDs had opened in Texas between 2010 and 2016, and that the increased number of FrEDs had not helped to reduce ED congestion in nearby hospitals. Not only were FrEDs not replacing care delivered by traditional EDs, but FrEDs were actually increasing the total amount of emergency care delivered to the community.

In the new study, the authors merged spending data with counts of FrEDs in each local market. They found that there were more new FrEDs in Texas than the other 3 states with 74% of local markets in Texas having at least 1 FrED by Q4 of 2017 compared with only 28% of markets in Arizona, 22% of markets in Florida, and 14% of markets in North Carolina.

In Texas, Florida, and Arizona, the addition of a FrED was associated with an increase in ED utilization between 3% and 5%. Spending per enrollee increased the most in Texas, from $132.18 in Q1 2014 to $215.92 in Q4 2017. The lowest increase was in Arizona ($51.65 to $57.90) followed by North Carolina ($53.23 to $79.81), and then Florida ($116.50 to $163.80).

“Consumers mistakenly thought that [FrEDs] would be low-cost because they look so much like a neighborhood clinic, and facility staff often told patients that their care would be covered by their health insurance, when in fact it wasn't," Vivian Ho, lead author and the James A. Baker III Institute Chair in Health Economics and director of the Center for Health and Biosciences at Rice's Baker Institute for Public Policy, said in a statement.

While out-of-pocket spending per enrollee increased for Texas, Florida, and Arizona, out-of-pocket spending dropped 15.3 percentage points in North Carolina. The authors speculated that the lower payment burden in North Carolina may have been the result of patients shifting away from using hospital EDs with out-of-network physicians to FrEDs with in-network physicians.

“State policy makers and researchers should carefully track spending and utilization of emergency care as freestanding EDs disseminate to better understand their potential health benefits and cost implications for patients,” the authors concluded.

References

1. Ho V, Xu Y, Akhter M. Freestanding emergency department entry and market-level spending on emergency care [published online October 22, 2019]. Acad Emerg Med. doi: 10.1111/acem.13848.

2. Xu Y, Ho V. Freestanding emergency departments in Texas do not alleviate congestion in hospital-based emergency departments [published online May 8, 2019]. Am J Emerg Med. doi: 10.1016/j.ajem.2019.05.020.