How Will Trends in Payments to Hospitals Impact the Practice of Emergency Medicine?

R. Myles Riner

R. Myles Riner , MD, FACEP

Partner Emeritus

Published April 20, 2012

Trying to predict the future is always dangerous ground; and payment for health care services in the context of health reform and huge budget deficits certainly qualifies as shifting sands, or perhaps more like landfill in an earthquake. And yet, how hospitals are compensated for services to patients in the ED or in other hospital service areas is likely to have a significant impact on how emergency physicians (EPs) practice, be they employed by hospitals or partners of an ED staffing group.

In fact, this has always been the case, though this influence has not always been that obvious, or direct. Heard of P4P? Been watching your use of ASA in patients with chest pain? How about your patient satisfaction scores? How emergency physicians manage their patients depends to a significant degree on how, and whether, the hospital is reimbursed for that care, even though there is a clear legal requirement to treat everyone the same. This is not to say that physicians are being encouraged or influenced to treat certain patients one way, and other patients another: it is more along the lines of whether or not the hospital can afford to purchase that new, faster CT, or pay the ophthalmologists to be on call to the ED. How the hospital is paid clearly influences how emergency medicine is practiced in that hospital.

But wait, is it still true that EPs are expected to treat everyone the same? In some EDs around the country, patients with so-called non-emergency conditions who can’t afford to hand over their co-pay, or have no insurance, might not get their script for antibiotics, while those who can pay, will. In some hospitals, even with EMTALA, the decision to transfer or not might still depend on the card in the patient’s wallet. That’s an issue for another blog: the point is that it is not possible to cleave the cost of care, compensation for care, and delivery of care – it is all tightly interwoven. It’s behind hospital-systems integration, and why we have lost more than 70 EDs in a decade in California.

So how will the future of payments to hospitals play out in the context of health reform and gigantic federal and state budget deficits, and how will the practice of emergency medicine react, respond, and reframe to this upheaval?

I believe that the transition from fee-for-service to risk-sharing will drag hospitals into an entirely different business model: one that drives considerations of the cost of clinical decision-making even more than considerations of the cost of capital, labor, and equipment that used to drive the hospital business models in past decades. Hospitals going at-risk for the cost of care is nothing new: Medicare DRGs have been around for quite awhile. In fact, the revenues of many hospitals are structured in such a way that their margins are now predicated more on physicians doing less than doing more.

The game changer was when commercial insurers decided to follow in the steps of Medicare; and cost-plus or fee-for-service network-hospital contracts evolved into various iterations of case-rate, case-limit rate, DRG and APC (Ambulatory Patient Classification) driven, bundled, capitated, and otherwise at-risk payment arrangements. The end result is likely to be a steadily increasing focus on wringing out those (particularly) expensive medical decisions that result in little or no benefit, as measured in outcomes and other (less valid?) performance indicators.

Is there waste in the current practice of emergency medicine? Come on. Can EPs practice in a more cost-effective, cost-conscious way, and still maintain the high quality of care and perception of care that patients, and third-party payers, have come to expect in our EDs? I am pretty sure we are going to find out.

Dr. Riner also blogs on The Fickle Finger.

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