Debate continues over the role of observation medicine in the emergency department. Initially, observation medicine was developed to provide an alternative to admission or discharge for disease presentations likely to be improved within a day or two. Patients and managed care organizations benefited from ED-based observation care because of the low cost outpatient alternative to an inpatient admission. Medicare offered a small incentive for the efforts of those physicians who designed efficient outpatient strategies for managing short-term observable diseases such as low and moderate risk chest pain, acute asthma, COPD, congestive heart failure, and acute abdominal pain.