Contradicting widespread views that emergency departments lose money for hospitals, a new California study finds that when admissions from the ED are included, nontrauma EDs actually generate 20% of a hospital's profits.
In the study, released Wednesday by the California HealthCare Foundation, researchers at the University of Southern California developed a new statistical accounting model that examined ED costs in the context of hospitalwide operations and economic costs by type of ED.
Although California EDs lost an average of $84 on each patient treated, the study found that the one out of seven ED patients who need to be admitted to the hospital, for the average profit is $1,220, which more than covered losses by patients not admitted.
"To understand the economic contributions and costs of emergency departments, they must be evaluated in the context of a hospital's overall operations, rather than as independent business units," says lead author Glenn Melnick, the USC Center for Health Financing, Policy and Management, in a release.
"In this cost-cutting era, this is an excellent study that illustrates emergency departments are not a loss leader, but an economic generator," says Michael Carius, M.D., immediate past president of the American College of Emergency Physicians and chairman of the emergency department at Norwalk (Conn.) Hospital.
"It validates what emergency medicine leaders for some time have been saying," Carius says. "It will encourage others to go back and look at their own books and will stimulate administrators to look differently at their hospitals' emergency departments in terms of the adequate supports that they give them. What we do in the emergency department is incredibly cost effective, it just seems high-cost when you look at only a very small number of economic variables."