Thursday, September 18, 2008

Be Careful What You Wish For

Hospitals have good reason to be concerned about the nurse-staffed retail clinics showing up in places like Wal-Mart and chain pharmacies.

As mentioned in my previous posting, hospitals have long discriminated against patients who use their Emergency Room for what are seen to be non-emergency medical needs. In the prevailing view of the health care delivery establishment, those patients ought to be getting their care in scheduled clinics or the offices of private physicians.

One expression of the discrimination has been an ER fee structure that discourages ER use for non-emergencies by loading some of the cost of “true” emergencies into the charges for the non-emergency visits. For insurance companies, that makes the cost of visit to the ER higher than the cost of a clinic visit, giving rise to the popular view that money can be saved by getting patients to use clinics or doctors’ offices instead of ERs..

There is a good deal of mythology in that view. Hospitals operate ERs because people need a place that is always open to which they can go for emergency care. Strokes, heart attacks, injuries due to accidents and medical events of that type do not occur according to a schedule.

So hospitals are committed to the basic cost of operating an ER on a 24/7 basis whether anybody shows up for care or not. The added cost of treating a patient who shows up with a runny nose is trivial. Actually, hospitals ought to be thankful for that sort of case because it gives the ER something useful and remunerative to do in between “real” emergencies.

The commercial entrepreneurs who are creating retail clinics have figured out that they can charge less than hospital ERs do for taking care of these non-emergency cases and still make money. They can also improve on the less-than-sterling service hospital ERs typically provide.

If these retail clinics succeed in drawing significant numbers of patients away from ERs, hospitals are going to suffer financially because they are not going to be able to reduce their cost by anything like the amount of income they will be losing.

Hospitals have long encouraged patients to use clinics and physicians’ offices instead of the ER for non-emergency care.

Retail clinics provide another example of the need to be careful what you wish for.

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