Costs of Emergency Care Fact Sheet

Main Points

  • Emergency care represents less than 2 percent of the nation’s $2.4 trillion in health care expenditures while covering 136 million people a year.i ii
  • Emergency departments are open 24 hours a day and provide “one-stop shopping” with all the hospital’s resources – such as diagnostic testing and consultation by other medical specialists – in one place.
  • The most pressing economic issue in emergency medicine is uncompensated care: the lack of adequate reimbursement for emergency medical care has led to the closure of hundreds of emergency departments.
  • The focus on preventing so-called “non-urgent” ER visits distracts policymakers from the real cost savings in reducing hospital admissions.
  • Emergency departments are critical to our communities and must be adequately funded.

Q. What are the costs of emergency care?

The cost of providing emergency care relates to the severity of a patient’s illness or injury. An illness or injury requiring multiple diagnostic tests and the services of medical specialists will cost more than something less complicated. Unlike a physician’s office, the ER must have all appropriate diagnostic resources available 24/7/365, which contributes to the cost of care. Given that two-thirds of emergency department visits occur after typical business hours,iii  having all the essential resources located in one place gives emergency departments an efficiency advantage no other part of the health care system can match.

The major categories on emergency department bills include professional services (physicians), pharmacy, supply, ancillary (laboratory, radiology), and miscellaneous. The fee for an emergency physician’s services on a medical bill typically is about 20-25 percent of the total charges for a visit. The hospital fees make up the difference.

Q. Is emergency care cost effective?

Yes: The fact that emergency departments treat 136 million patients for just two cents out of every health care dollar speaks for itself. Given the fixed costs of staffing and equipping emergency departments to treat patients at any hour, with any type of problem from a sprained ankle to appendicitis or a gunshot wound, the cost of seeing any individual patient is much less than it would be if a private physician’s office stayed open after hours and equipped itself with every resource a hospital already has on hand.

Emergency departments are more efficient, effective and timely in diagnosing and treating many acute medical conditions than physicians’ offices because they have immediate access to all the hospital’s equipment and services, including diagnostic imaging, laboratory testing, pharmaceuticals and other medical specialists. Many conditions such as heart attacks, strokes and major trauma are critically dependent on timely diagnosis and treatment to ensure good outcomes and can only be treated in an emergency department.

Health plans often look only at the frequency and cost of isolated patient visits and not the value of the emergency medical system as a whole. Emergency physicians continue to be concerned that payer policy jeopardizes the health of their patients. When insurance plans discourage patients from going to the emergency department, they are sending a dangerous message that patients – instead of doctors – should be diagnosing themselves. Delayed medical care often leads to much more complicated and costly medical conditions.

Q. Do emergency departments provide a lot of uncompensated care?

About half of all emergency services go uncompensated, according to Centers for Medicare & Medicaid Services (CMS).iv The typical ER treats 1 in 5 patients without insurance or a clear method for reimbursement. The CDC reported that 19 percent of all emergency patients in 2009 were uninsured.v

A study in Annals of Emergency Medicine in 2007 reported that overall reimbursement for ER charges decreased from 57 percent in 1996 to 42 percent in 2004. In 2004, private insurance paid 56 percent of charges, Medicare paid 38 percent of charges, uninsured patients paid 35 percent of charges and Medicaid paid 33 percent of charges.vi

While funding is down, demand for emergency care is up. According to the Centers for Disease Control, emergency department visits in 2009 rose to nearly 136 million.vii

Q. What effect does defensive medicine have on the cost of care provided in emergency departments?

Nearly half (44 percent) of emergency physicians responding to a poll say fear of lawsuits is the biggest challenge to cutting emergency department costs. More than half (53 percent) say this fear is the main reason for ordering the number of tests they do.viii  Every additional diagnostic test adds to the overall cost of care.

Emergency departments need more resources to care for patients, not fewer, and medical liability reform would help reduce overall costs by reducing the need for defensive medicine.

Q. If we could just get all of those “frequent flyers” and freeloaders out of the ER, wouldn’t we save a lot of money in the health care system?

Non-urgent patients make up less than 8 percent of all emergency patientsix and their reasons for visiting the emergency department are as legitimate as anyone else’s. Most of these patients truly believe they are having an emergency only to find out later that their problem wasn’t so serious after all (for example, chest pain diagnosed as indigestion not a heart attack). Just because a patient doesn’t “look” sick doesn’t mean they aren’t sick. The cost of treating non-urgent patients is an insignificant part of the overall cost of emergency care.

Frequent users of the emergency department are a tiny fraction of the 136 million people who come to our ERs every year. Typically these patients have complicated medical problems that can’t be addressed elsewhere in the health care system. They are usually insured and more likely to be admitted to the hospital from the ER.x

Researchers published in Annals of Emergency Medicine in 2012 wrote this: “Achieving cost savings will require a multifaceted approach: streamlined care within the [emergency department], methods for preventing hospital admissions for patients already in the [emergency department], and establishing pathways to effectively manage some of these visits in other sites of care. A simple focus on diverting visits ultimately will not result in substantial savings to the system or in meaningful improvements in the quality and coordination of care.”xi

For more information, visit www.acep.org.

[i]  http://www.acep.org/uploadedFiles/ACEP/newsroom/NewsMediaResources/StatisticsData/Just%202%20booklet.pdf

[ii] Report: Accounting for the cost of US health care: A new look at why Americans spend more, McKinsey Global Institute, December 2008

And Agency for Healthcare Research and Quality. Emergency Room Services-Mean and Median Expenses per Person With Expense and Distribution of Expenses by Source of Payment: United States, 2006. Medical Expenditure Panel Survey Household Component Data. Generated interactively. (March 04, 2013)

 [iii] http://www.cdc.gov/nchs/data/nhsr/nhsr026.pdf

[iv] Federal Register Vo. 67, No 251 Tuesday December 31, 2002 http://www.cms.gov/Regulations-and-Guidance/Regulations-and-Policies/QuarterlyProviderUpdates/Downloads/cms1204fc_1.pdf, page 8

 [v] http://www.acep.org/uploadedFiles/ACEP/newsroom/NewsMediaResources/StatisticsData/2009%20NHAMCS_ED_Factsheet_ED.pdf

 [vi] http://www.annemergmed.com/article/S0196-0644(07)01436-9/abstract

 [vii] http://www.acep.org/uploadedFiles/ACEP/newsroom/NewsMediaResources/StatisticsData/2009%20NHAMCS_ED_Factsheet_ED.pdf

 [viii] ACEP member poll conducted from March 3 to March 11, 2011:  http://www.acep.org/uploadedFiles/ACEP/newsroom/NewsMediaResources/StatisticsData/ACEP%20Patient%20Visit%20Profile%202011.pdf

 [ix] http://www.acep.org/uploadedFiles/ACEP/newsroom/NewsMediaResources/StatisticsData/2009%20NHAMCS_ED_Factsheet_ED.pdf

 [x] http://www.annemergmed.com/article/S0196-0644(10)00105-8/abstract

 [xi] http://www.annemergmed.com/webfiles/images/journals/ymem/FA-pbsmulowitz.pdf