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Rx for the ER

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On average, California’s emergency rooms generate 20 percent of a hospital’s net profit, according to a new USC study.

Patients admitted to the hospital from the emergency department yield an average profit of $1,220. This more than compensates for the hospital’s average $84-per-patient loss incurred by the six out of seven emergency patients who are not admitted.

“It’s said in the press that emergency departments are underfunded and forced to close, but the data don’t support that,” said lead researcher Glenn Melnick, a professor in USC’s School of Policy, Planning, and Development and director of USC’s Center for Health Financing, Policy and Management.

The study used a new accounting model that analyzed the state’s 245 non-trauma emergency departments, or EDs, within the financial context of the entire hospital, rather than as separate entities, as previous studies did.

“EDs are not freestanding institutions,” Melnick said. “You can’t just look at one piece of the puzzle; you have to look at them together and evaluate.”

In another finding by the study, nearly two-thirds of non-maternity admissions come through emergency departments.

“EDs have become the primary portal for admissions into the hospital,” Melnick said. “That’s a surprising finding, and that percentage seems to be going up over time.”

The study, which used statewide averages, also determined that an ED’s economic impact on its hospital is affected by three factors: ED volume, location and type of facility (profit, not-for-profit, public). For example, rural EDs averaged $73 per visit, while the larger urban EDs cost averaged $350 per visit.

Melnick presented his findings at a briefing for health-care professionals in USC’s Davidson Conference Center. Representatives of Southern California hospitals were in attendance.

Three panelists at the briefing commented on the research findings and implications for emergency departments and hospitals: Richard DeCarlo, vice president of ambulatory operations and business development at Long Beach Memorial Medical Center; Loren Johnson, chief medical officer of Sutter Emergency Medical Associates, Roseville, Calif.; and Jim Lott, executive vice president of policy development and communications at the Hospital Association of Southern California.

DeCarlo and Lott took part in the study.

“We know anecdotally that admits from the ER have gone up another 15 percent [since the study’s data],” Lott said.

He also explained an application of the study’s data. “We’ve got a serious problem here in Southern California, especially Los Angeles, with patient diversions. At any given time, one in three EDs is closed to ambulances.

“With an increase in wait times, from 53 minutes to up to a maximum of 21 hours, the implications are far-reaching and can ultimately be harmful,” Lott said.

His solution: Keep scheduled admissions out of the emergency department ? a common practice nowadays ? to free up space and resources for true emergency patients. With that strategy, both hospitals and patients will profit.

”Your emergency room probably isn’t going anywhere,” said Melnick. “Probably a bigger worry for California consumers is, will the whole hospital be here a year from now?”

The study was funded by the California HealthCare Foundation. An issued brief is available online at:

Contact Elaine Lapriore at (213) 740-7895.

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