Value vs. Volume: Where Does Your Emergency Department Fall?

Pay-for-performance in health care and other value-based approaches can solve many of the challenges facing emergency departments. For instance, many patients who use the emergency department (ED) don’t really need emergency care. About 30% of ED visits made by patients with a chronic condition could have taken place in an outpatient setting instead.

However, value-based care caters to supply as well as demand. Demand-side issues are just part of the problem. On the supply side, many hospital emergency departments are inefficient, with the result that your employees — just like your company — end up paying too much. Patients aren’t the culprits when EDs fail them; they’re often the victims. And everyone ends up paying more.

The cost of receiving care in the ED increased 31% between 2012 and 2016. That’s unsustainable and avoidable. ED costs vary unpredictably, and often patients can end up dramatically overcharged.

In many cases, inefficient and uncoordinated care is the root cause. So at least part of the solution must be more efficient, coordinated care — in other words, a pay-for-performance system.

Mitigating Costs With Value-Based Care

Emergency departments have often been relegated to the fringes of value-based programs. For example, Medicare’s Hospital Value-Based Purchasing (VBP) program rewards or penalizes acute care hospitals using incentive payments. These payments change based on the quality of inpatient care provided, rather than simply the quantity. VBP combines 30-day readmission and mortality rates with other quality metrics to determine what the hospital earns. But that program, like many others, only affects inpatient payments. Now, a larger effort to address emergency departments is beginning to emerge.

Reducing wasteful use of resources can make a huge difference. That’s what the Michigan Emergency Department Improvement Collaborative (MEDIC) discovered: A study authored by MEDIC’s program directors found that reducing unnecessary imaging in EDs could save $3.8 million annually.

MEDIC, a physician-led network of Michigan EDs focused on improving the quality of emergency care throughout the state, is funded by Blue Cross Blue Shield of Michigan and the Blue Care Network.

Stewards of Patients

The American College of Emergency Physicians has been pushing for a more value-based approach. They are taking on a role — “stewards of patients” — for a longer stretch of time, beginning when a patient enters the ED and extending into the weeks afterward, to give providers a chance to hand care off to the next provider or care team.

To accomplish this, Medicare is considering a proposal in which emergency physicians would track patients who have certain conditions for 30 days after they leave the ED to ensure coordination of care. Participating ED docs could receive bonuses or penalties based on the cost and quality of their services.

The Value and Risks of Incentives

Each of these examples illustrates that pay-for-performance in health care, including emergency care, is about overall value, not just short-term savings.

A small 2019 ED study drives this home. Researchers found that a $100 incentive to discharge patients within four hours alleviated overcrowding and improved access for other patients. However, the study did note that discharging patients too early can harm their health. As one of the authors said, “There is no sense for an incentive to discharge patients that may require admission to hospital.”

Considering Your Team

You should emphasize to your employees that the ED should be a last resort; overuse puts an unnecessary strain on providers and health care systems alike. But it’s just as important to find out which EDs are covered by your plan, and whether they embrace value-based care. Pay-for-performance can save money, yes, but think bigger — an efficient ED could save an employee’s life.

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