Healthcare News & Insights

Hospital emergency departments: Do they cost or save you money?



Do these two statements seem to contradict each other?

  • Emergency departments (EDs) account for half of all hospital admissions.
  • EDs may play a role in slowing the growth of healthcare costs.

According to a new study, they don’t.

But if EDs account for nearly half of all hospital admissions and it’s the most expensive place to get care, how could it possibly lower costs?

Answer: The EDs role in our healthcare system is growing.

Emergency department’s role

While it’s true that EDs deliver the most expensive care, you have to remember they’re the one place been that people go to for emergency care of life-threatening conditions, which costs big bucks to provide. And EDs are under a legal obligation to provide care to all in need without regard for their ability to pay.

Today, EDs are acting more and more as an advanced diagnostic center for primary care physicians, notes the RAND Corporation study, The Evolving Role of Emergency Departments in the United States. And while they’re responsible for a lot of hospital admissions, they also keep a large portion of people from being admitted.

For example, someone having an asthma attack, in most cases, doesn’t need to be admitted to the hospital. They just need emergency care and then they can return home. This actually saves the system money, because it doesn’t require a hospital stay.

One of the goals of the Affordable Care Act was to reduce reliance on expensive ED care, so the Emergency Medicine Action Fund had the study conducted to  develop a comprehensive picture of how EDs contribute to modern health care and suggest how emergency care can be integrated with community care in a cost-effective way.

Key findings

Here are some of the key findings of the study:

    • Office-based physicians are directing some patients they used to admit to the hospital to the ED. Between 2003 and 2009, inpatient admissions to U.S. hospitals grew at a slower rate than the population overall. Nearly all of the growth in admissions was due to a 17% increase in unscheduled inpatient admissions from EDs. This growth in ED admissions more than offset a 10% decrease in admissions from doctors’ offices and other outpatient settings.


    • EDs support primary care practices by performing complex diagnostic workups and handling overflow, after-hours and weekend demand for care. Almost all of the physicians interviewed—specialist and primary care alike—confirmed that office-based physicians increasingly rely on EDs to evaluate complex patients with potentially serious problems, rather than managing these patient themselves. Therefore, emergency physicians are increasingly playing the part of decisionmaker for approximately half of all U.S. hospital admissions. Financially this is important because admissions generate the bulk of a hospital’s revenue, but also because inpatient care accounts for 31% of national healthcare spending.


    • The majority of patients who go to an ED for care leave with the same condition they had entering the ED. What that means is most ambulatory patients seek treatment in an ED, because they don’t feel there is a viable alternative or their doctor sent them there, not because it’s convenient for them.


    • EDs may be having a positive effect in constraining the growth of inpatient admissions. While non-elective ED admissions have increased over the past 10 years, inpatient admissions of ED patients with preventable admissions have remained consistent.

“Use of hospital emergency departments is growing faster than the use of other parts of the American medical system, ” Dr. Art Kellermann, the study’s senior author and senior researcher at RAND, said in a press release. “While more can be done to reduce the number of unnecessary visits to emergency rooms, our research suggests emergency rooms can play a key role in limiting growth of preventable hospital admissions.”

Future focus

The researchers suggest that in order to reduce non-urgent ED visits, the focus should be placed on getting patients timely access to primary care and less expensive care, instead of blocking access to EDs for these patients.

“We believe there needs to be more effort to integrate the operations of emergency departments into both inpatient and outpatient care systems,” Kristy Morganti, the study’s lead author and a policy researcher at RAND, said in the release.

Suggestions for doing this include widespread adoption of:

  • interconnected health information technology
  • better coordination of care and case management, and
  • more collaborative approaches to medical practice.

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