If there's one category of healthcare targeted for extinction under reform, it's the unnecessary emergency department visit.
The use of high-overhead emergency facilities for minor ailments is expensive care. To cut into that expense, some hospitals have been building and staffing "urgent-care" centers to which lower-acuity cases are diverted from the emergency department.
An emergency department director at a Washington state healthcare system had a hunch that such an alternative would preserve Medicaid business for a children's hospital after the state's shift earlier this year to managed-care contracting and fixed payments.
But before he pitched the idea to the system's leaders, he plumbed the electronic records of the emergency department at Mary Bridge Children's Hospital and Health Center in Tacoma, Wash., to calculate the overall effect on expense control and reimbursement.
Instead of pulling together the facts to back him up, the computer model proved him wrong.
Contrary conclusions.Even with the lower expense level, the urgent-care center would not attract enough ideal patients to pay for clinicians to treat them, said Ted Walkley, M.D., director of emergency services for the MultiCare Health System, a Tacoma-based network of three hospitals and multiple clinics.
The computer predicted volume for the urgent-care facility and the costs of breaking even. To make it work, the center would have to see 10 Medicaid patients an hour to meet overhead expenses of staffing, space and a physician, Dr. Walkley said. Or, five private-paying patients an hour would make ends meet.
The hospital could expect that kind of private-paying volume during a few peak hours in the evening, but not over the total period of time that needed to be covered, he said.
The only alternative-increasing the volume by diverting slightly higher-acuity patients-would bleed the emergency department of cases that could result in higher reimbursement and help cover fixed costs, he said.
Every private patient seen in urgent care instead of the emergency department would average $60 lost to the institution-a little less than that for Medicaid patients.
Dr. Walkley credited the computer-modeling capability of the hospital's comprehensive information system with identifying erroneous assumptions about volume of business before any commitment was made.
But also because of the data generated in the exercise, Dr. Walkley said he has identified the target volume and other variables that would justify an urgent-care facility sometime in the future. "The moment it's economically viable, we can do it," he said.
The volume may never rise to a viable level as managed care takes the low-acuity visit out of the picture. But, said Dr. Walkley, "if we dismantle the plan, all it costs us is paper and time."
And if capitated, up-front contracting takes hold in the state, Dr. Walkley said, the urgent-care center immediately becomes attractive for its cost-conserving potential.
In that scenario, the computer model will be able to measure the effects of diverting as many cases as possible to urgent care, staffing for a lower volume in the emergency department and then reconfiguring the emergency facility to make better use of higher-cost idle time and excess capacity, he said.
Computing power.To develop an accurate computer model, Dr. Walkley said he needed to develop a profile of the ideal urgent-care patient-someone whose complaint could be taken care of with minimal nursing intervention and physician assessment. Then he had to predict the percentage of emergency department volume that fit the profile.
The rest of the volume had to be stratified into a second category needing intensive emergency services and a third group that could go either way.
The health system had done "a half dozen" previous surveys on the urgent-care issue by pulling charts or surveying physicians, but it was a labor-intensive process and the surveys did not agree, Dr. Walkley said. And while the surveys were somewhat effective in establishing acuity-level proportions, they "never could get a handle on volume," he said.
By using the data available in a healthcare information system purchased two years ago from PHAMIS of Seattle, he was able to look at 100% of the patient volume and crunch extensive data on demographics, facility and ancillary charges, patient complaints and final diagnosis.
Data on the time and date of each visit allowed him to match volume against the ebb and flow of staffing levels.
The system's ability to combine financial and clinical information allowed Dr. Walkley to load data into a personal computer and "play with" a number of hypothetical situations using a database of current and historical information to predict the expense of certain clinical configurations.
Medicaid shift.The bad news on volume was only partly the result of being able to break down the total into acuity levels. In that exercise, the computer model also detected a precipitous drop in overall volume.
Because the PHAMIS-Lastword information system supplied current data, MultiCare Health System was able to detect the decrease when the state's Medicaid managed-care program took effect.
About 60% to 65% of the pediatric emergency department's 24,000 visits in 1993 were paid for by Medicaid, said Dr. Walkley.
As recently as last January, Medicaid patients used the department at a high rate for low-acuity problems. "But in March, they all went away," he said.
It amounted to an overall 30% reduction in emergency volume over the same period last year. And the Medicaid proportion of the total dropped to less than 50% from the previous 60% to 65%, Dr. Walkley said.
The most dramatic decreases involved lower-acuity patients.The overall 30% drop represented a 50% to 60% reduction in cases of minor illness paid for by Medicaid, he said.
For higher-acuity cases, the Medicaid percentage stayed proportionate to the private sector.
By mid-March, the computer model already was tracking the shift. The health system also was able to determine that 40% of the pediatric emergency department's volume was Medicaid managed care-fixed fees for facility and physician services.
The lower volume of Medicaid business, combined with fixed rates of $25 to $50 for physician fees and $75 to $150 for facility fees, means the hospital has to bolster its emergency department for now, including seeing as many low-acuity patients as possible. "This is the population that is traditionally your buffer," Dr. Walkley said. "You need to treat the ER patients that need care the most, but the ones standing around (waiting longer for care) are paying for the staff."
But if capitation becomes an option, staff usage "becomes the driver of cost savings," he said, and the computer model's premise would be to move as many patients as possible to an urgent-care setting. That raises the problem of staffing the emergency department for an average volume of sick patients but having staff sit idle while the urgent-care load piles up, he said.
In that scenario, the hospital may reconfigure the emergency department to handle short-stay patients, making fuller use of staff and space while offering payers a cheaper alternative to admitting patients for less than a day, he said.