Finances are no longer the only reason freestanding emergency departments are closing; legislators are now passing laws to restrict and even ban them.
The Louisiana state legislature recently banned independent freestanding emergency departments if they are not part of a hospital's main campus or an off-site campus of a licensed hospital. It also forbids licensing an off-site campus within the primary service area of a rural hospital. The law does not apply to nonprofit hospitals that obtained a building or construction permit before April 2019.
Louisiana Sen. Fred Mills, Jr., who championed the legislation, said the law was intended “to protect Louisiana patients from the many problems experienced throughout the rest of the United States.” The Louisiana Department of Health had been expressing concerns since 2016 with the freestanding ED model and the agency's lack of authority to prohibit, license, and regulate them.
Senator Mills said Louisiana had watched the problems in Texas as freestanding EDs not affiliated with a hospital proliferated. He added that Adeptus Health was “very aggressive” in Louisiana a few years ago, forming a partnership with Ochsner Health System in 2015 and later filing for bankruptcy and having licensed hospitals assume their role. “The licensed rural hospitals approached me and said that freestanding emergency departments, even those affiliated with other licensed hospitals, were posing a threat to their existence by moving into their primary service area,” he said.
Adeptus Health, based in Lewisville, TX, filed for Chapter 11 bankruptcy in April 2017, and emerged from it six months later after the company restructured and was acquired by Deerfield Management. (Read more about this in “Freestanding EDs in Texas Closing One after Another.” EMN. 2018;40;1; http://bit.ly/2Ne9nIZ.)
Senator Mills, a Republican who heads the state senate's health and welfare committee, said he did not think any independent freestanding emergency centers remain in Louisiana. “My understanding is that those that we had, like Adeptus, have already closed, filed for bankruptcy, or had to have their operations assumed by a licensed hospital,” he said. “I am not aware of any independent freestanding emergency departments that will be impacted by this law.”
But Rhonda Sandel, the board president of the Texas Association of Freestanding Emergency Centers, noted pointedly that the Louisiana law does not prohibit hospitals from building their own off-campus emergency care centers. “It is unfortunate that the Louisiana legislature has responded to the hospital lobby by stamping out increased competition and improved patient access before allowing even one independent freestanding emergency center to serve Louisianans,” she said. “Banning future freestanding ERs will limit patients' access to care and may cost them their lives. Patients in Louisiana deserve more emergency medical options, not fewer, especially in rural areas.”
A Rural Problem
The push for the legislation came from the Louisiana Rural Hospital Coalition, said Charles Castillo, the executive director of the group. He said they had asked that the legislation be introduced to protect their members. “Our membership is made up of 50 rural hospitals that are less than 60 beds,” he said. “We were concerned about some aspects of the expansion of these clinics, particularly for our rural hospitals close to urban areas. Since the emergency department [visit] often leads to a patient being admitted, any threat to our emergency departments would significantly affect the financial standing of a rural hospital.”
Rural hospitals are of special concern to Louisiana, which passed the Rural Hospital Preservation Act in 1997. “Since that time, the legislature has paid particular attention to rural hospitals not only from a health care need but also from an economic development need,” Mr. Castillo said.
He said his group is not only concerned about independent freestanding emergency departments but also those affiliated with larger urban hospital systems. That was the rationale for requiring that no freestanding emergency centers be built in the service area of a local hospital.
The fear for rural hospitals is surprising, said Cedric Dark, MD, MPH, who has studied freestanding emergency departments extensively. Most of the freestanding emergency centers exist in suburbs of large cities, said Dr. Dark, an assistant professor of emergency medicine at Baylor College of Medicine in Houston. Most of those in Texas are clustered around Houston, Dallas, San Antonio, and Austin.
The Medicare Payment Advisory Commission corroborated this in a June 2017 report: Almost all 566 standalone emergency departments in the country were located in metropolitan areas with existing ED capacity, more affluent ZIP codes with higher household incomes, and more privately insured patients. (http://bit.ly/2Y1W6ti.)
The commission said independent freestanding EDs cannot receive Medicare reimbursement, at least for technical parts of a patient's visit. “Concern exists about whether Medicare pays [off-campus EDs] appropriately because while they are paid the same rates as on-campus hospital EDs, available data suggest that standalone EDs may serve lower-acuity patients.” (http://bit.ly/2Y1W6ti.) The commission suggested that rural freestanding EDs could have a role in the Medicare program.
Following the Money
Jeremiah D. Schuur, MD, and colleagues found that 54.2 percent of the 360 freestanding EDs in 30 states were hospital satellites. Another 36.6 percent were independent, and 9.2 percent were not classifiable. (Ann Emerg Med. 2017;69:383.) Three states—Texas (181), Ohio (34), and Colorado (24)—had the highest number of freestanding EDs, accounting for 66 percent of the total nationwide. “In Texas, freestanding EDs were located in ZIP codes that had fewer Hispanics, had a greater number of hospital-based EDs and physician offices, and had more physician visits and medical spending per year than ZIP codes without a freestanding ED. In Ohio, freestanding EDs were in ZIP codes with fewer hospital-based EDs,” according to the study.
Study after study has confirmed this, Dr. Dark said. Freestanding emergency departments are located farther away from public transportation than hospitals are, he said. “Freestandings go where the money is,” Dr. Dark said. “Hospitals have it easier. They have a larger catchment area. They have services that recruit higher-paying patients. They can offset losses.”
Much of the concern about freestanding EDs in the Texas legislature in 2019 revolves around insurance coverage and patient fees. One bill requires freestanding emergency departments to disclose their insurance network and fees that patients may be charged. The law covers independent and hospital-affiliated centers, and was sparked by complaints about surprise bills at freestanding EDs. AARP Texas reviewed the websites of 213 freestanding EDs and found that 77 percent said on their websites that they accept insurance but were out of network for all major health plans. (http://bit.ly/2Y55M6w.)
“There is some confusion among patients as to ‘Is this place in the strip mall an emergency department or an urgent care center?’ even though a big sign on the door or above it says emergency care,” Dr. Dark said.
He emphasized that freestanding EDs are not a threat to rural communities. “Freestandings don't go to rural communities. There is not enough volume to sustain them,” he said. “I disagree that freestandings are bad for rural health, particularly when there is not a tertiary care hospital in their community. Are you going to build a hospital or a freestanding ED in a certain community? You can use the freestanding ED to sift through and find the 20 percent of patients who need to be in a hospital. Eighty to 90 percent of the population is OK to go home. That is how I would do it.”
Ms. SoRellehas been a medical and science writer for more than 40 years, previously at the University of Texas MD Anderson Cancer Center, the Houston Chronicle, and Baylor College of Medicine. She has received more than 60 awards, including the Texas Human Rights Foundation Award. She has been a contributor to EMN for more than 20 years.