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Emergency Medicine's Cost Problem in a Volatile Market

Coleman, Matthew

doi: 10.1097/01.EEM.0000410029.34316.17
Emergency Medicine's Cost Problem in a Volatile Market


In today's fiscally conservative environment, the word “cut” is haphazardly thrown around the field of emergency medicine. But are intelligent cuts to profligate and unnecessary spending really necessary? Yes, according to Richard E. Wolfe, MD, the chief of emergency medicine at Beth Israel Deaconess Medical Center and an associate professor at Harvard Medical School.

To solve the cost problem in emergency medicine in the United States, according to Dr. Wolfe, we must first understand that we are in an aggressive global economy. “When we talk about affordable care and the new health care act, we need to address the problem,” he said during his James D. Mills memorial lecture at the American College of Emergency Physicians Scientific Assembly in October. “And the fundamental problem that's really [rearranging] deck chairs on the Titanic is that we are in a global economy and we are competing with our global trade partners.”

About $2.38 an hour per person is dedicated to health care in the United States compared with 96 cents with Europe and Canada. “This is a handicap,” Dr. Wolfe said. “This sort of problem ends up affecting the workforce, makes us less competitive, makes more corporations outsource as much as they can, which translates to loss of jobs. [T]he unemployment rate that we are seeing today has to be somewhat attributed to the health care costs. We are part of the problem so we need to figure out how to be part of the solution.”

So why are U.S. health care costs so much more expensive than health care spending in Europe? Dr. Wolfe cited several statistics in his lecture:

  • Nurses in Europe get paid a fourth or a fifth of what U.S. nurses earn.
  • Europeans put two to four beds in each patient room.
  • U.S. emergency departments focus more on technological developments like da Vinci robots that cost more than $1 million, but in Dr. Wolfe's opinion only increase time in surgery.
  • Pharmaceuticals are 40 percent more expensive in the United States, although Dr. Wolfe noted that “we bear the cost of research,” and provide good to the world, but this still must be corrected to get to competitive prices.

“The incredible growth of administrative costs,” is a big issue, he said. “We have an incredibly high administration burden relative to other countries.” Those costs represent a portion of indirect costs in an emergency department's budget, which Dr. Wolfe said has potential for cost improvement in emergency care.

“The indirect costs are the costs that are put in the ED budget to account for things that have nothing to do with emergency care,” he said. “It's the offices of the administrators, the marketing department. It's the hallways where there isn't any care delivery. Every piece of the hospital that doesn't generate income gets put in this bucket. The overall costs of care are direct and indirect costs. Indirect costs are in the ballpark of 50 percent. Imagine you got that monkey off your back, what you can do, how you can become more cost-effective.”

Dr. Wolfe said while U.S. nurses should continue to make high salaries, they should “function like managers and have health care techs working under them.” Emergency medicine could also focus on telemedicine, lean management, and urgent care as ways to eliminate direct costs, but while cogent cuts in spending can help emergency medicine, Dr. Wolfe warned against the current trend of funding cuts at every angle.

“Emergency medicine care is viewed now by payers, PCPs, and administrators as a drain on finance, as something that should be avoided at all costs,” Dr. Wolfe said.

To dispel this misguided belief, he said, the focus must be placed on formulating ways to add value to emergency medicine while reducing the cost of care. “The single most costly thing in emergency medicine is admitting patients,” Dr. Wolfe said. “Hospital admission is $10,000. We need to think of other safe places to deliver care. I would argue that if we build up home care networks, close report with checks by PCPs the next day, much better social infrastructure and use of nursing facilities, we can have a big impact on those patients that we admit a little bit because of a medical problem but a lot because we just don't think they are safe at home.”

Observation units are another way emergency departments can reduce costs and add value. “If you place a patient in observation run by an emergency physicians, the times the patient stays are much shorter and the costs are such that the hospitals make margin on it,” Dr. Wolfe said.

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