Avoidable Hospital ED Visits Cost Healthcare System $32B Annually

July 25, 2019 - Reducing avoidable hospital emergency department (ED) visits is key to lowering healthcare spending, according to new research from UnitedHealth Group.

The managed care company recently reported that avoidable ED visits, or trips to the emergency room for a condition that is not an actual emergency and can be treated by primary care providers, costs the healthcare system $32 billion each year.

About two-thirds of hospital ED visits by privately insured individuals are avoidable, meaning 18 million visits to the emergency room each year could be effectively treated in the primary care setting, UnitedHealth Group found.

These patients are commonly seeking care for bronchitis, cough, dizziness, flu, headache, low back pain, nausea, sore throat, strep throat and upper respiratory infection, which can be effectively dealt with at a primary care provider or an urgent care center.

The average cost of treating the conditions at a hospital ED Is $2,032, which is 12 times higher than visiting a physician office ($167) and ten times higher than going to an urgent care center ($193). The healthcare system could save an average of more than $1,800 per avoidable hospital ED visit if privately insured individuals went to a physician’s office or urgent care center instead, UnitedHealth Group stressed.

Hospital facility fees make the hospital ED a much more expensive care setting. The research showed that, on average, hospital facility fees make up $1,069 of the total costs of a hospital ED visit.

Receiving lab, pathology, and radiology services at the hospital also contributed to higher costs, the research stated. Average costs for the services performed in a hospital ED were $335, which were ten times more expensive than at a physician’s office.

With physician offices and urgent care centers becoming increasingly available and convenient, reducing the number of visits to the hospital ED for primary care treatable conditions is a major way for the healthcare system to reduce spending.

CMS actuaries recently projected national healthcare spending to increase from $3.5 trillion in 2017 to $6 trillion by 2027, meaning healthcare will make up over 19 percent of gross domestic product (GDP) by the end of the period.

Price growth is the primarily culprit behind healthcare spending increased, the actuaries reported. They estimated that healthcare prices would increase by an average of 2.5 percent per year through 2027 and account for almost one-half of projected personal healthcare spending growth.

Recent research in Health Affairs also came to the same conclusion, finding that healthcare prices are to blame for the US spending nearly twice as much on healthcare between 2000 and 2016.

UnitedHealth Group concurred with CMS actuaries and other researchers. The managed care company noted that its research showed that hospital prices are driving total cost of care. But avoidable hospital ED visits and high-value physicians are also two areas in which the healthcare system could save.

Researchers from UnitedHealth Group plan to release future reports on reducing the cost of care through hospital prices and high-value physicians in Medicare. In the meantime, the company published its data on avoidable hospital ED visits to help providers, payers, and other stakeholders to start reducing healthcare spending.

Ensuring patients have access to proactive primary care for their chronic conditions is a good place for providers and payers to start, a recent report from Premier suggested. ED visits for people with at least one chronic condition accounted for nearly 60 percent of all annual visits in 2017 and $8.3 billion in spending. Of the visits, over 4.3 million were potential preventable, the report from February found.

“It is widely known that people with chronic conditions contribute to high healthcare expenditures, making them a critical population for more strategic, preventative care,” stated Joe Damore, senior vice president of population health consulting at Premier.

“While providers face the challenges of perverse incentives that have impeded coordinated, cost-effective care delivery, alternative payment models create an incentive for providers to organize high-value networks, such as accountable care organizations (ACOs), which deliver coordinated care across the continuum.”

Premier also suggested that ambulatory and community providers implement a coordinated care management model to identify patients who need proactive primary care to avoid a hospital ED visit.