A question on urgent care creep

[Sporadicus]

This is a question for EM docs who have done some work in administration-

I did my EM rotation at an urban, tertiary academic center treating the local medicaid/self pay population, and from what I saw and heard the department was a perennial money-loser for the hospital and was treated as such by the bigwigs. I was under the impression that outside of major cities, most community ED's were cash cows and earned tons of money by seeing non-emergent, mostly insured civilians with outpatient problems; all of this was corroborated by a few of my attendings, one who was actively planning on leaving the ED to join an Urgent Care group that was starting up nearby.

Fast forward to a few weeks ago, I came home to my smallish New England hometown to find that there are now three Urgent Care centers within a 5-mile radius of my house. All run by separate companies and none of them affiliated with the big hospital downtown. One is open 24 hours, and all of them (according to the advertisements) are staffed by BC EM docs. Considering all of this, if I had the choice to overtreat my runny nose, the lower copay and generally happy (no-EMTALA) atmosphere of a UC seems like a no-brainer compared to our overcrowded local ED.

My question, taking all of this into account, is a) what sort of visits generate the bulk of an ED's earnings? b) how does the rapid growth of urgent care centers impact the bottom line for EDs that are not attached to big urban tertiary academic hospitals? and c) how do you see the trend playing out for the future of Emergency Medicine that so many boarded docs choose to leave the EDs for the Urgent Cares?

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[The White Coat Investor]

In my area UCs are staffed by PAs and the occasional FP, not EPs. They also aren't equipped to work up chest pain, belly pain, dyspnea, severe headache etc. Are they siphoning off stuff that doesn't have to come to the ED? Absolutely. Is that a bad thing for the system (not my pocketbook)? Probably not.

It affects our bottom line by stealing our insured patients with problems that can be handled in an urgent care. Less money for us.

 

[NinerNiner999]

In my area UCs are staffed by PAs and the occasional FP, not EPs. They also aren't equipped to work up chest pain, belly pain, dyspnea, severe headache etc. Are they siphoning off stuff that doesn't have to come to the ED? Absolutely. Is that a bad thing for the system (not my pocketbook)? Probably not.

It affects our bottom line by stealing our insured patients with problems that can be handled in an urgent care. Less money for us.

This.

 

[@JackShephard]

Urgent care is a good thing for the United States health care system.

As for ED salaries, I don't know which specialty is counting on their pay going up in the near future other than Family Med and even with them it's uncertain.

 

[Birdstrike]

This is a question for EM docs who have done some work in administration-

I did my EM rotation at an urban, tertiary academic center treating the local medicaid/self pay population, and from what I saw and heard the department was a perennial money-loser for the hospital and was treated as such by the bigwigs. I was under the impression that outside of major cities, most community ED's were cash cows and earned tons of money by seeing non-emergent, mostly insured civilians with outpatient problems; all of this was corroborated by a few of my attendings, one who was actively planning on leaving the ED to join an Urgent Care group that was starting up nearby.

Fast forward to a few weeks ago, I came home to my smallish New England hometown to find that there are now three Urgent Care centers within a 5-mile radius of my house. All run by separate companies and none of them affiliated with the big hospital downtown. One is open 24 hours, and all of them (according to the advertisements) are staffed by BC EM docs. Considering all of this, if I had the choice to overtreat my runny nose, the lower copay and generally happy (no-EMTALA) atmosphere of a UC seems like a no-brainer compared to our overcrowded local ED.

My question, taking all of this into account, is a) what sort of visits generate the bulk of an ED's earnings? b) how does the rapid growth of urgent care centers impact the bottom line for EDs that are not attached to big urban tertiary academic hospitals? and c) how do you see the trend playing out for the future of Emergency Medicine that so many boarded docs choose to leave the EDs for the Urgent Cares?

A-Insured patients and most of all sick, insured patients that get admitted. That's the gift that keeps on giving, as each day they're in house, they wrack up a bigger bill.

B-Urgent cares hurt the ED bottom line, but not yours, if you're smart enough, business savy enough, and adventurous enough to open your own urgent care. That makes you the hunter, not the hunted.

C- Not very many boarded EM docs leave for urgent care mainly because it's a significant pay cut, unless you are the owner. Where I'm at, UC is a 30-50% pay cut compared to EM.

 

[Hercules]

A-Insured patients and most of all sick, insured patients that get admitted. That's the gift that keeps on giving, as each day they're in house, they wrack up a bigger bill.

B-Urgent cares hurt the ED bottom line, but not yours, if you're smart enough, business savy enough, and adventurous enough to open your own urgent care. That makes you the hunter, not the hunted.

C- Not very many boarded EM docs leave for urgent care mainly because it's a significant pay cut, unless you are the owner. Where I'm at, UC is a 30-50% pay cut compared to EM.

I can answer this from both sides. I have been with my current EM group for 5 years, and 3 years ago I started an urgent care along with four other EM boarded docs. We all still work full-time as partners in a SDG. 5 urgent cares have opened up within 10 miles of my group's ED in the past 5 years and I've been able to observe that effect on our ED as well.

A & B) The studies I saw always talked about how UCs tended to affect PCP offices more than EDs in terms of decreased volume. I think this is probably true since sick people are going to keep going to EDs. Well people with non-emergency complaints with PCPs who put them off for a week are going to quit seeing their PCP and go to the UC instead. What none of the studies address though is how UCs affect the payor mix in an ED. My ED's volume has grown by almost 60% over the past 3 years. Unfortunately we've seen an increasing percentage of self-pay and medicaid while our insured percentage has declined. This translates into collecting about 10-15% less per patient.

C) As Birdstrike pointed out there is not much money to be made as an hourly employee in an UC; all the money is made by the owner(s). On average UCs pay physicians $85-$120/hr. In comparison you shouldn't make less than $200/hr in an ED unless you choose to take a low paying job for other reasons (location, family, etc.).

I think more ED physicians should open and own urgent cares as well as other business ventures. I'm bullish on EM, but I'm also a big fan of keeping my investments diversified and my profession is my biggest investment to date.

 

[deleted547339]

I can answer this from both sides. I have been with my current EM group for 5 years, and 3 years ago I started an urgent care along with four other EM boarded docs. We all still work full-time as partners in a SDG. 5 urgent cares have opened up within 10 miles of my group's ED in the past 5 years and I've been able to observe that effect on our ED as well.

A & B) The studies I saw always talked about how UCs tended to affect PCP offices more than EDs in terms of decreased volume. I think this is probably true since sick people are going to keep going to EDs. Well people with non-emergency complaints with PCPs who put them off for a week are going to quit seeing their PCP and go to the UC instead. What none of the studies address though is how UCs affect the payor mix in an ED. My ED's volume has grown by almost 60% over the past 3 years. Unfortunately we've seen an increasing percentage of self-pay and medicaid while our insured percentage has declined. This translates into collecting about 10-15% less per patient.

C) As Birdstrike pointed out there is not much money to be made as an hourly employee in an UC; all the money is made by the owner(s). On average UCs pay physicians $85-$120/hr. In comparison you shouldn't make less than $200/hr in an ED unless you choose to take a low paying job for other reasons (location, family, etc.).

I think more ED physicians should open and own urgent cares as well as other business ventures. I'm bullish on EM, but I'm also a big fan of keeping my investments diversified and my profession is my biggest investment to date.

How has the UC done for you and your partners?

 

[EctopicFetus]

Here in Phoenix I looked really hard into this. Perhaps it is the only place in the country where the UCs arent making money. The market is so oversaturated a number have closed and one of the guys I know sold a slew of them for no profit after years of struggling to turn a profit. I imagine in most places this is a win. Here PCPs are opening up Urgent Cares as part of their own practice.

 

[styphon]

In my area UCs are staffed by PAs and the occasional FP, not EPs. They also aren't equipped to work up chest pain, belly pain, dyspnea, severe headache etc. Are they siphoning off stuff that doesn't have to come to the ED? Absolutely. Is that a bad thing for the system (not my pocketbook)? Probably not.

I guess the staffing depends on location. In my area every UC has a MD - either a FP or a EP, and depending on the size of the UC - it may also have PA/NPs (usually ER experience). They usually at min. have xrays - some have CT scanners and/or US. Most have "istat" labs - CBC, BMP.

They also do not pay close to what the ER doctors make here - and it seems the ER doctors who work there are nearing/in retirement - or picking up occasional shifts.

In a study in one of the family medicine journals - UC took away from acute visits to PMDs, but the ERs in this study had the same volume - the authors theory was that a certain population will go to the ER for simple problems no matter what - and the people more likely to use the UC, would not have gone to the ER.

 

[Hercules]

styphon: that's the study I was referencing that focused on volume but neglected payor mix effect on EDs.

TimesNewRoman: It has done well for us. We were cash flow positive after about 4 months and paid off our working capital loan after about a year if I remember everything correctly (still have the real estate loan). It's been profitable so far with continued growth.

EctopicFetus: Phoenix is not alone. There are lots of UCs that fail. The two biggest causes are poor location choice and lack of funds to weather the ramp up phase. In choosing a location, one of the biggest mistakes is not looking outside your own community for the best location. We did a lot of site research and decided to build our UC about 30 mins away from the hospital in a high traffic area with only 2 UCs in the community and both were >5 miles away.

 

[Arcan57]

It's also important not to conflate UC with freestanding EDs. There are currently 79 freestanding EDs in my market and the majority can turn a profit off of 8-9 pts/day. UCs don't charge facility fees and so are going to need higher volumes to collect the same amount of money. The freestandings have an uneasy peace with the hospitals right now because the admits coming out of them are all insured. The majority of hospitals are hemorrhaging staff to the freestandings and with capturing outpatient lives a priority for most hospital systems, I expect the hospital lobbies to start putting legislative pressure on what defines an ED.

 

[styphon]

It's also important not to conflate UC with freestanding EDs. There are currently 79 freestanding EDs in my market and the majority can turn a profit off of 8-9 pts/day. UCs don't charge facility fees and so are going to need higher volumes to collect the same amount of money. The freestandings have an uneasy peace with the hospitals right now because the admits coming out of them are all insured. The majority of hospitals are hemorrhaging staff to the freestandings and with capturing outpatient lives a priority for most hospital systems, I expect the hospital lobbies to start putting legislative pressure on what defines an ED.

Very interesting. In the city + a 30 mile radius(population +1million) we have ONE freestanding ER - and it is owned by the catholic health system.. But we have two large chains of UC, and a bunch of small ones that have 1-3 offices.

 

[Birdstrike]

It's also important not to conflate UC with freestanding EDs. There are currently 79 freestanding EDs in my market and the majority can turn a profit off of 8-9 pts/day. UCs don't charge facility fees and so are going to need higher volumes to collect the same amount of money. The freestandings have an uneasy peace with the hospitals right now because the admits coming out of them are all insured. The majority of hospitals are hemorrhaging staff to the freestandings and with capturing outpatient lives a priority for most hospital systems, I expect the hospital lobbies to start putting legislative pressure on what defines an ED.

Am I correct that free standing EDs (as opposed to UCs) are not allowed in all states? Plus Obamacare has banned any new facilities that would be categorized as a physicians owned "hospital."

 

[shoal]

Birdstrike you're correct, I v believe in mn they are not allowed. Ny they are running rampant

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[namethatsmell]

There are currently 79 freestanding EDs in my market

79?!?! Holy bejeezus. Is your market just one city? What's the average size of one of these freestanding EDs?

 

[Arcan57]

Am I correct that free standing EDs (as opposed to UCs) are not allowed in all states? Plus Obamacare has banned any new facilities that would be categorized as a physicians owned "hospital."

I don't know how many states allow them but I know that it's the state government that has defined the requirements for a free-standing ED. Since there's no hospital, a lot of these EDs are owned by one or a group of physicians although there's a lot of venture capital groups that are throwing in money also.

79?!?! Holy bejeezus. Is your market just one city? What's the average size of one of these freestanding EDs?

Yes, in one city. Everyone's expecting that the bubble is going to burst but right now they're pulling down huge profits. Most of them have about the same footprint as a community bank.

 

[Hercules]

There are currently 79 freestanding EDs in my market and the majority can turn a profit off of 8-9 pts/day. UCs don't charge facility fees and so are going to need higher volumes to collect the same amount of money.

8-9 pts/day to cover cost? I know the facility fees are adjusted by region but it would take some crazy high facility fees to pull that off. The facility fee obviously makes a big difference but you also have a lot more overhead running an ED than an UC does. Paying for 24 hrs of BCEM physician coverage is going to run you $4-5k a day by itself not counting staffing with 2-3 RNs, PCTs, a rad tech, and secretaries. On top of that, the costs to build and then buy medical supplies are significantly higher. Free standing EDs can be extremely profitable, but it seems to me that you would need some extremely high facility fees and tight operating expenses to run a 24hr ED and turn profit at <10 pts/day.

 

[deleted206819]

I don't know how many states allow them but I know that it's the state government that has defined the requirements for a free-standing ED. Since there's no hospital, a lot of these EDs are owned by one or a group of physicians although there's a lot of venture capital groups that are throwing in money also.

Yes, in one city. Everyone's expecting that the bubble is going to burst but right now they're pulling down huge profits. Most of them have about the same footprint as a community bank.

Which city is this?

 

[d2305]

I see Pts from Gulf Shores, Brewton, Foley ect. I can't believe they drive that far, but they do. We're cheaper than chain urgent cares.

 

[Hercules]

I see Pts from Gulf Shores, Brewton, Foley ect. I can't believe they drive that far, but they do. We're cheaper than chain urgent cares.

What do you mean by cheaper? Do you work in a freestanding ED or an UC? Insurances charge the same copay for UCs regardless of which one a patient chooses. You could offer a lower self pay rate I guess and be cheaper for those patients.

 

[d2305]

Cash, check, or credit card. Less paperwork with no insurance.

 

[Hercules]

Cash, check, or credit card. Less paperwork with no insurance.

Good for you guys! I have heard of several different urgent cares going to a cash only practice with no insurance. Several have failed, and it takes some pretty specific demographics to make it work, but those who do are incredibly satisfied with not having to deal with insurance companies or AR management.

 

[fuegofrio17]

8-9 pts/day to cover cost?

Actually, I'm involved in several projects and have seen the numbers. If you run lean, you can break even at 6 patients a day. There are now over 80+ freestandings in the above mentioned market and First Choice ER is putting them up like Starbucks on every corner. They will carry out an IPO next month on the NASDAQ for over $100 million.

The main limitation to freestanding ER expansion is state legislation. Some states are more favorable to the licensing of freestandings, which allows for reimbursement of the facility fees from insurance companies at equivalent rates as hospital based ERs. The other factor is whether the state is a Certificate of Need (CON) state. Non-CON states allow you to build medical facilities wherever you want.

In Non-CON states, freestanding ERs and micro-hospitals are proliferating rampantly to fill demand in the market for alternatives to the traditional ER model. It is a paradigm similar to the start of the outpatient surgical centers when they detached from the hospitals and allowed surgeons to take more control over their patient base and working environment.

 

[Sporadicus]

Actually, I'm involved in several projects and have seen the numbers. If you run lean, you can break even at 6 patients a day. There are now over 80+ freestandings in the above mentioned market and First Choice ER is putting them up like Starbucks on every corner. They will carry out an IPO next month on the NASDAQ for over $100 million.

The main limitation to freestanding ER expansion is state legislation. Some states are more favorable to the licensing of freestandings, which allows for reimbursement of the facility fees from insurance companies at equivalent rates as hospital based ERs. The other factor is whether the state is a Certificate of Need (CON) state. Non-CON states allow you to build medical facilities wherever you want.

In Non-CON states, freestanding ERs and micro-hospitals are proliferating rampantly to fill demand in the market for alternatives to the traditional ER model. It is a paradigm similar to the start of the outpatient surgical centers when they detached from the hospitals and allowed surgeons to take more control over their patient base and working environment.

That seems like it would compound the issues addressed from my original post, namely the freestanding places affecting payor mix at traditional hospital-attached EDs. Are these freestanding EDs bound by the same EMTALA guidelines?

 

[Birdstrike]

That seems like it would compound the issues addressed from my original post, namely the freestanding places affecting payor mix at traditional hospital-attached EDs. Are these freestanding EDs bound by the same EMTALA guidelines?

Generally not, unless a state has it's own EMTALA-like law.

 

[Arcan57]

Generally not, unless a state has it's own EMTALA-like law.

That would be the easiest way to close the majority of free-standings. The model only works if you can collect something in the ballpark of what you're billing, and EMTALA destroys your chances at that.

 

[fuegofrio17]

EMTALA only applies to CMS participants. If you don't participate in Medicare or Medicaid, you are not bound by EMTALA.

However, many states require a medical screening exam to be offered to all patients presenting for treatment at a FSER. The difference, though, is that there often is no further requirement for treatment after the screening exam is performed. If no emergent medical condition exists you can obviously discharge them. If an emergent medical condition is present, you are required to attempt to stabilize the patient, but you can then immediately call EMS for transport to another facility that is a higher level of care. As a freestanding ER has no consulting services or inpatient capabilities, another hospital-based ER is always a higher level of care. Thus, though state laws sometimes require medical screening exams, they often do not dictate what happens after the screening exam occurs. The state based screening laws also provide for fewer punitive measures than those under the federal unfunded mandate of EMTALA.