Hospitals and stand-alone ER operators are fully aware that many patients who show up in the ER are people with private insurance who want the convenience of being seen at any hour without an appointment, with all testing done onsite. Even many primary-care physicians are sending patients directly to the ER rather than seeing them first in their offices, the RAND study found.
“If you're a hospital executive, you're focused on your operating room and your ER, because that's going to be the primary generator of patient volume and bed volume,” says Jeff Swearingen, managing director at Edgemont Capital Partners. The ER, he says, is “the front door to the hospital.”
While groups such as the American Hospital Association have attempted to lobby state legislatures to level the playing field—pushing back against the exemptions from the Emergency Medical Treatment and Labor Act and certificate-of-need requirements—health systems are increasingly realizing that they, too, should try to get a slice of the revenue pie. And that means collaborating with the opposing team. “Ultimately, it's a little bit defensive,” Swearingen says.
Baylor Health Care System, Dallas, is one system that formed a joint venture with Emerus, a physician-founded free-standing ER operator, to operate eight such facilities.
Traditionally, free-standing ERs were founded by emergency services physicians looking to have greater control of their practices, says Dr. John Milne, chairman of Eastside Emergency Physicians, which provides staffing services for Seattle-based Swedish Medical Center's three free-standing ERs. But a growing number of systems are looking into these businesses, he says.
“The advantage of a free-standing ER is that it lets them aggressively move into new markets without having to build a new hospital,” he says. “It also becomes a very nimble platform, particularly as you look at ACO-type strategies.”
In Raleigh, N.C., WakeMed Health & Hospitals chose to venture into the stand-alone ER space on its own. It recently opened its fourth location in August in the suburb of Garner.
Like many privately owned free-standing ERs, WakeMed is capitalizing on patient demand for speedy care and casting a wider net into the suburbs that feed into its tertiary-care facility.