I want to highlight something that bothers me about the entire idea of getting massive cost savings from emergency room diversions (via TPM):
The example Rep. Bill Huizenga (R-MI) gave in an interview with MLive.com was from his own experience when he waited until the morning after to take his youngest son to the doctor with an injured arm, because he did not want to waste money on an expensive emergency room visit. The arm, it turned out, was broken.
“We weren’t sure what was going on. It was in the evening, so I splinted it up and we wrapped it up, and the decision was, okay, do we go to the ER? We thought it was a sprain, but weren’t sure,” Huizenga said, adding that he and his wife “took every precaution and decided to go in the next morning.”
“When it [comes to] those type of things, do you keep your child home from school and take him the next morning to the doctor because of a cold or a flu, versus take him into the emergency room? If you don’t have a cost difference, you’ll make different decisions,” he said.
I hate this example for a lot of reasons including the fact that a broken bone is a legitimately good reason to go to the emergency room. It is a source of significant pain, significant impairment and over time a simple break left untreated can lead to a complex set of breaks that requires very expensive surgery. But that is besides the greater set of points why this is a bad story to tell.
Let’s go back to the most important graph in healthcare:
ER utilization can be broken into three components. True emergencies that lead to admissions. Here ER utilization is expensive but very valuable. Then there are acute emergencies that occur either off hours or can not be handled at the PCP or Urgent Care office due to the lack of equipment where the ER may not admit but they are an appropriate resource. Asthma attacks and broken bones are common pediatric examples of this case while unspecified chest pains and shortness of breath are good examples of older people. And then there are the cases where the ER is overkill. The problem is that ER overkill is a real problem but it is not a big driver of total medical spending. It might be a $5-$10 per member per month in the most aggressive modeling.
Marginal ER utilization for flip a coin decisions where having a large deductible could drive people to wait a day or two before getting a broken bone treated is not that big of a deal. Those are the cases on the left hand side of the graph. People who don’t use the ER a lot, who don’t use a lot of services a lot don’t cost the system a lot of money. Shifting a single in-network medium severity ER visit to a single in-network medium severity Urgent Care visit might lower the contract expenditure by $200 or $300. If the kid’s arm is broken and it needs surgery, that is 5% of the total episode of care cost. If there is nothing beyond an “oowie”, the shift might save 75% of the episode cost of care. The shopping paradigm is that it will change behaviors among people who are not driving most of the healthcare spending. It will save money but it is limited in what it saves as the people use a lot of medical resources will blow through any out of limit cap very quickly.
And this story only makes sense if there is a significant substitution effect between ER and Urgent Cares.
Secondly we are seeing that expanded urgent care utilization does not have significant impact on ER utilization.
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