The impact of emergency department observation units on a health system.

IMPORTANCE: Protocol driven ED observation units (EDOU) have been shown to improve outcomes for patients and payers, however their impact on an entire health system is unknown. Two thirds of US hospitals do not have such units. OBJECTIVE: To determine the impact of a protocol-driven EDOU on health system length of stay, cost, and resource utilization. METHODS: A retrospective, observational, cross-sectional study of observation patients managed over 25 consecutive months in a four-hospital academic health system. Patients were identified using the "admit to observation" order and limited to adult, emergent / urgent, non-obstetric patients. Data was retrieved from a cost accounting database. The primary study exposure was the setting for observation care which was broken into three discrete groups: EDOUs (n = 3), hospital medicine observation units (HMSOU, n = 2), and a non-observation unit (NOU) bed located anywhere in the hospital. Outcomes included observation-to-inpatient admission rate, length of stay (LoS), total direct cost, and inpatient bed days saved. Unadjusted outcomes were compared, and outcomes were adjusted using multiple study variables. LoS and cost were compared using quantile regressions. Inpatient admit rate was compared using logistic regressions. RESULTS: The sample consisted of 48,145 patients who were 57.4% female, 48% Black, 46% White, median age of 58, with some variation in most common diagnoses and payer groups. The median unadjusted outcomes favored EDOU over NOU settings for admission rate (13.1% vs 37.1%), LoS [17.9 vs 35.6 h), and cost ($1279 vs $2022). The adjusted outcomes favored EDOU over NOU settings for admission rates [12.3% (95% CI 9.7-15.3) vs 26.4% (CI 21.3-32.3)], LoS differences [11.1 h (CI 10.6-11.5 h)] and cost differences [$127.5 (CI $105.4 - $149.5)]. Adjusted differences were similar and favored EDOU over HMSOU settings. For the health system, the total adjusted annualized savings of the EDOUs was 10,399 bed days and $1,329,443 in total direct cost per year. CONCLUSION: Within an academic medical center, EDOUs were associated with improved resource utilization and reduced cost. This represents a significant opportunity for hospitals to improve efficiency and contain costs.

The financial implications of variability in decision to disposition times for patients placed in observation status.

INTRODUCTION: A host of variables beyond the control of the ED physician affect ED throughput. In-process time represents the period most directly affected by physician decision-making patterns. This study attempts to evaluate implications of variable decision-making for those patients placed in observation status for throughput and financial implications. METHODS: A retrospective review of all ED admissions to observation status over an 8-month period, for observation decision times (ODT) was performed. The average cost per patient bed hour in the ED, opportunity cost from patients not being seen during excessive ODTs, and the cost of an unfilled bed in an observation unit were estimated. RESULTS: Of 2693 observation cases reviewed, 114 (4.2%) had ODTs longer than two standard deviations above the median. These accumulated ODTs lead to an additional cost of $12,307, or $107 per admission. An additional 45 patients could have been treated during these excess ODTs, from which result an opportunity loss ranging from $32 to $1350 per hour. There is an additional cost of $8036 to maintain empty observation beds in the hospital. CONCLUSION: For those ODTs beyond two standard deviations above the median, there is a direct unreimbursed cost to the hospital, an opportunity cost for patients not seen in those occupied ED beds, and a cost of maintaining unfilled observation beds. Variability in the efficiency of decision-making suggests real consequences in terms of throughput and cost-to-treat.

"Implications of cost-sharing for observation care among Medicare beneficiaries: a pilot survey".

BACKGROUND: Medicare beneficiaries hospitalized under observation status have significant cost-sharing responsibilities under Medicare Part B. Prior work has demonstrated an association between increased cost-sharing and health care rationing among low-income Medicare beneficiaries. The objective of this study was to explore the potential impact of observation cost-sharing on future medical decision making of Medicare beneficiaries. METHODS: Single-center pilot cohort study. A convenience sample of Medicare beneficiaries hospitalized under observation status care was surveyed. RESULTS: Out of 144 respondents, low-income beneficiaries were more likely to be concerned about the cost of their observation stay than higher-income respondents (70.7% vs29.3%, p = 0.015). If hospitalized under observation status again, there was a trend among low-income beneficiaries to request completion of their workup outside of the hospital (56.3% vs 43.8%), and to consider leaving against medical advice (AMA) (100% vs 0%), though these trends were not statistically significant (p = 0.30). CONCLUSION: The results of this pilot study suggest that low-income Medicare beneficiaries hospitalized under observation status have greater concerns about their cost-sharing obligations than their higher income peers. Cost-sharing for observation care may have unintended consequences on utilization for low-income beneficiaries. Future studies should examine this potential relationship on a larger scale.

Financial Viability of Emergency Department Observation Unit Billing Models.

BACKGROUND: Outpatients receive observation services to determine the need for inpatient admission. These services are usually provided without the use of condition-specific protocols and in an unstructured manner, scattered throughout a hospital in areas typically designated for inpatient care. Emergency department observation units (EDOUs) use protocolized care to offer an efficient alternative with shorter lengths of stay, lower costs, and higher patient satisfaction. EDOU growth is limited by existing policy barriers that prevent a "two-service" model of separate professional billing for both emergency and observation services. The majority of EDOUs use the "one-service" model, where a single composite professional fee is billed for both emergency and observation services. The financial implications of these models are not well understood. METHODS: We created a Monte Carlo simulation by building a model that reflects current clinical practice in the United States and uses inputs gathered from the most recently available peer-reviewed literature, national survey, and payer data. Using this simulation, we modeled annual staffing costs and payments for professional services under two common models of care in an EDOU. We also modeled cash flows over a continuous range of daily EDOU patient encounters to illustrate the dynamic relationship between costs and revenue over various staffing levels. RESULTS: We estimate the mean (±SD) annual net cash flow to be a net loss of $315,382 (±$89,635) in the one-service model and a net profit of $37,569 (±$359,583) in the two-service model. The two-service model is financially sustainable at daily billable encounters above 20, while in the one-service model, costs exceed revenue regardless of encounter count. Physician cost per hour and daily patient encounters had the most significant impact on model estimates. CONCLUSIONS: In the one-service model, EDOU staffing costs exceed payments at all levels of patient encounters, making a hospital subsidy necessary to create a financially sustainable practice. Professional groups seeking to staff and bill for both emergency and observation services are seldom able to do so due to EDOU size limitations and the regulatory hurdles that require setting up a separate professional group for each service. Policymakers and health care leaders should encourage universal adoption of EDOUs by removing restrictions and allowing the two-service model to be the standard billing option. These findings may inform planning and policy regarding observation services.

The Impact of Maryland's Global Budget Payment Reform on Emergency Department Admission Rates in a Single Health System.

BACKGROUND: In 2014, the state of Maryland (MD) moved away from fee-for-service payments and into a global budget revenue (GBR) structure where hospitals have a fixed revenue target, independent of patient volume or services provided. We assess the effects of GBR adoption on emergency department (ED) admission decisions among adult encounters. METHODS: We used hospital medical record and billing data from adult ED encounters from January 1, 2011, through December 31, 2015, with four MD hospitals and two District of Columbia (DC) hospitals within the same health system. We performed difference-in-differences analysis and calculated the effects of the GBR model on ED admission rates (inpatient and observation) using hospital fixed-effect regression adjusted for patient, hospital, and community factors. We also examined changes in the distribution of acuity among ED admissions with GBR adoption. RESULTS: The study sample included 1,492,953 ED encounters with a mean ED admission rate of 20.5%. The ED admission rate difference pre- and post-GBR was -1.14% (95% confidence interval [CI] = -0.89 to -1.40) for MD hospitals and -0.04% (95% CI = -0.24 to 0.32) for DC hospitals with a difference-in-differences result of -1.10% (95% CI = -1.34 to -0.86). This change was attributable to a -3.3% (95% CI = -3.54 to -3.08) decline in inpatient admissions and 2.7% (95% CI = 2.53 to 2.79) increase in observation admissions. Declines in admissions were observed primarily among mild-to-moderate severity of illness encounters with a low risk of mortality. CONCLUSIONS: Within the same health system, implementation of global budgeting in MD hospitals was associated with a decline in ED admissions-particularly lower-acuity admissions-compared to DC hospitals that remained under fee-for-service payments.

Management of dyspepsia-The role of the ED Observation unit to optimize patient outcomes.

BACKGROUND: Dyspepsia is a common complaint that can confer significant burden on one's quality of life and may also be associated with serious underlying conditions. The objective of this study was to determine if patients admitted to the emergency department observation unit (EDOU) for severe or persistent dyspepsia would have cost effective management in terms of investigations performed, length and cost of hospital stay. The secondary objective was to determine if any patient characteristics could predict a need for admission to the inpatient unit. METHODS: Retrospective chart reviews of patients admitted to the EDOU under the Dyspepsia protocol between January 2008 and August 2014 were conducted. Baseline demographics, investigations performed, outcomes related to EDOU stay, admission and 30-day re-presentation outcomes were recorded. RESULTS: A total of 1304 patients were included. Median length of stay was 1day. Cumulative bed-saved days were 38 per month. Two hundred eighteen (16.7%) patients required admission to the inpatient service for further management, while 533 (40.9%) and 313 (24.0%) patients underwent esophagogastroduodenoscopy and hepatobiliary ultrasonography, respectively. No major adverse events were attributed to the EDOU admissions or delays in treatment. No significant clinically relevant factors were associated with a need for admission from the EDOU to the inpatient unit. Median cost of the EDOU admission was approximately one-third that of a similar admission to the inpatient unit. CONCLUSION: The EDOU is an appropriate setting to facilitate investigations and treatment of patients with dyspepsia with considerable bed-saved days.