For-profit emergency rooms draw patients, and anger

These stand-alone facilities are spreading in affluent communities, but hospitals and insurance companies see them as unfair competitors.

By Bruce Kennedy Jul 31, 2013 10:02AM

Doctor sitting in office with patient talking and smiling © Paul Bradbury, OJO Images, Getty ImagesThey're known as free-standing or stand-alone emergency rooms, and they're springing up in some unlikely places -- like next to the tanning salon at the local suburban strip mall. These for-profit ERs aren't attached to hospitals, and unlike the more common urgent-care centers, they can handle life-threatening issues like a heart attack or stroke.


Geared toward affluent communities, stand-alone ERs are convenient -- but at a cost. The final bill at one of these facilities, according to the Denver Post, can end up being four to five times more than at an urgent care center or clinic.


They're also coming under intense criticism from hospitals, urgent care centers and insurance companies that see stand-alone ERs as both competition and a financial strain on the overall cost of medical care.


Companies such as Texas-based First Choice Emergency Room, however, position themselves as an alternative to overburdened hospitals. First Choice has 16 facilities in Texas and is expanding its operations into Colorado.


Stand-alone ERs started in the 1990s in rural areas but have caught on as hospital ERs have become overwhelmed with patients. Ambulances don't bring patients to stand-alone ERs, and patients requiring hospitalization, surgery or a specialist's care are transferred by contracted ambulance from a free-standing ER to a regular hospital.


Reports say the number of stand-alone ERs has doubled in the past four years to more than 400 nationally.


The Federal Emergency Medical Treatment & Labor Act (EMTALA) guarantees the public has access to emergency services regardless of their ability to pay, and that includes the freestanding ERs. But critics say the for-profit facilities specifically target well-insured consumers because in most circumstances insurance companies have to pay for ER visits if the patient believes he's having a medical emergency.


Patients at stand-alone ERs can also be charged very expensive facility fees on top of the physician's costs, which often get passed on to the insurer.


That's drawing the ire of the insurance sector. Bloomberg reports Aetna (AET) has sued several free-standing ERs for "wrongfully submitted facility fees." The insurance giant also claimed the for-profit ERs are businesses that have "masqueraded as hospital emergency rooms, without a license or any of the associated overhead."


Insurance companies are also expecting some patients, suffering sticker shock after a visit to a free-standing ER, to think twice next time.


"There's a learning curve on the patient's part," Dr. Elizabeth Kraft, chief medical officer for Anthem's Blue Cross insurance in Colorado (the parent company of Blue Cross is WellPoint (WLP)) told the Denver Post, "and they may get a bigger financial hit than they were expecting."


More on moneyNOW

126Comments
Jul 31, 2013 2:20PM
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I remember when insurance was insurance.  You went where every you decided could give you the best care and you paid 20% after deductible and the insurance paid 80%.  The competition in the market kept prices in line.  Once insurance found out they could form "networks" and reduce competition by leaving certain providers out unless they accepted lower fees, the free market has become distorted and sadly, not in the consumers favor.  Once insurance became involved as the payer versus the policy owner the market has seen runaway pricing in all matters of health care.  Insurance became a dictator in telling you which doctors, hospitals, pharmacies, etc you could go to.  If a certain business or professional was not in the network you had to pay more to see them.  The consumer lost the ability to chose. 

A free standing, for profit ER should be able to provide services cheaper than a hospital ER.  They overhead should be less and in affluent neighborhoods this business model should attract less of those unable or unwilling to pay.  The insurance companies are probably mad as they are having to really insure people now and the insurance company has not figured out yet how to screw the free standing ER services.

Jul 31, 2013 3:13PM
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I don't understand the problem. If I break a glass doing dishes and need to get stitched up, or my son falls off the jungle gym and breaks his arm, Blue Cross is fine if I wait for 4-5 hours at a hospital ER, but they have a problem with paying the same amount to the stand alone ER where I might wait 20-30 minutes? It's still an emergency, it's still a physician who will assess the situation. And my going there allows for the hospital ER to have better quality of care for more severe cases that might require hospitalization.

Isn't this good for everyone?

 

BTW calling them "for profit" is just an attempt to get a rise out of the "common man" because there are plenty of hospitals that are operated as "for profit" businesses.

Jul 31, 2013 1:35PM
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+I don't think the stand alone ER is a threat to anyone. If they don't produce a good product, they will go out of business. The government should let the free enterprise determine if the ERs are a good thing. 
Jul 31, 2013 2:36PM
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Wow the medical industry does not like competition?  I'm shocked [sic]
Jul 31, 2013 2:21PM
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This is the wave of the future for those who can afford it.  One of many answers to Obamacare as the wealthy will still require premium healthcare.
Jul 31, 2013 1:53PM
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As long as people are made aware that the ERs are a business and not a normal hospital and that insurance doesn't cover it, fine.  Can't wait to hear about the horrible collection calls and bankruptcies that could arise from these things though, if they aren't properly labeled.
Jul 31, 2013 1:27PM
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Correct me if I'm wrong, but I thought that most insurers have a network of participating facilities. They can say up front: "We do not cover emergencies if you go to one of these facilities - they are out of our network and you're on your own if you choose to go there". That's part of the contract between the insurance company and the insured. Problem solved. It's my decision whether I want to go within-network or out-of-network, and the financial consequences are on me.

 

The insurance companies should not be complaining as long as they make it clear that they will not cover services rendered in these facilities. If hospitals are complaining, maybe they need to wake up and take a page from these new facilities. As RUstpd said, free market. 

Jul 31, 2013 1:32PM
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Wow... MSN showing bias. This is exactly the model we are going to be seeing in the future. And I do not believe a word about the costs. The very model dictates that the costs are much lower for a free-standing facility. What the Lib morons don't realize about "free" healthcare is it is NOT free!!!!!!

The reason a typical Hospital ER visit is so expensive is you are helping to pay for the other half of the patients in the waiting room next to you that have no insurance! Refer back to the article -

"The Federal Emergency Medical Treatment & Labor Act () guarantees the public has access to emergency services regardless of their ability to pay,". Says it all. 15-30 million illegals???

Do the math. We are toast!

Jul 31, 2013 1:52PM
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So they prefer them to operate at a loss???

An ER, Hospital, Doctors private practice, even the insurance companies operate at "A PROFIT".  They are a business.  They must cover payrolls, expenses, utilities etc etc just like any other business.  If they operate at a loss they lose quality staff and eventually close.

 

That's what has occurred here in southern Arizona. The cost of mandates government care for illegal aliens has bankrupted many local medical facilities so they went out of business or relocated away from the area so now paying customers have to drive to Tucson or Phoenix for care.

Jul 31, 2013 3:45PM
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I happen to be the Medical Director at a Free standing ER.  We see everyone regardless of payer status, with 52% of the patients being self pay(no pay) or Medicaid(lose money).  We have saved countless lives in an area where the nearest ER is 8 miles away.  Yes the cost is high, as is all ER visits, but no different than any ER.  Problem is too many people utilize the ER as a clinic, which it is not, and god forbid you talk about the medicaid abuse.  They ARE not urgent care facilities. We have residency trained board certified ER doctors 24 hours/day, doing all the ER procedures.  Most freestanding ER's offer excellent care. Our patient satisfaction scores are the highest in the system. Just ask the patients.
Jul 31, 2013 3:11PM
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Great idea.  Paying out of pocket market value is what our health system needs.  Everyone should be aware of what it really costs.  Leaving out the insurance companies totally is what the insurance, lawyers and politicians most fear.  Great for the customer but not so great for those who make all the money in a system set up to defy all other inflation standards and be politically manipulated non stop.
Jul 31, 2013 3:56PM
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Good for them. This is where healthcare is going in the U.S. Medicare doesn't pay for the true cost of medical services anymore. 10,000 doctors per the WSJ article this week have stopped taking Medicare patients since 2006. Doctors will get around Obamacare by a fee based system. You need a heart transplant? $200,000. Kidney $150,000. It's come to this because of big government.

 

Nice job AARP in screwing your members.

Jul 31, 2013 3:15PM
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So insurance company's want to close down free standing ER's that help people, and help with overburdening other hospitals? 
Jul 31, 2013 1:51PM
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Having trouble seeing this as a liberal complaint.  It states that well-insured, more affluent people seem to be the ones complaining the most.  Those usually aren't liberals.  Where are you reading that?

Jul 31, 2013 3:30PM
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I've been in insurance for 41 years, & can say with absolute confidence that for-profit insurance companies have absolutely no business providing health care.  Some things can't be operated on a for profit basis, like orphanages, disaster relief, the United States Marine Corps, & our health care.

 

I've asked before, but received no reply - how does the CEO's yacht, or the board chairman's private jet improve out health care?

Jul 31, 2013 4:05PM
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Going to one of these versus waiting at the local hospital? The local hospital has to take care  of people that call 911 because they don't feel well!  I hear it all the time on our city-wide radio system. The fire chief tells me it is because they think that coming by ambulance moves them to the front of the line. It doesn't, but it ties up critical ambulance time to transport them. Idiots.
Jul 31, 2013 3:08PM
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Sounds like the hospitals and regular ER's are figuring out they are losing money to these places that actually give a damn about the patients health.
Jul 31, 2013 4:16PM
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People often fail to realize that the healthcare industry is a highly competitive industry, and this competition reduces costs for consumers.  Resistance to healthy competition and cost-controlling is completely unjustified in this scenario.  These free standing clinics are not the only options--higher service charges are completely warranted if they are able to deliver a higher quality product than their competitors.  To drive out these free-standing ERs would only diminish the quality of care and competitive nature that exists in our healthcare industry today.
Jul 31, 2013 2:45PM
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Who cares?! You VOTE WITH YOUR DOLLAR!!!!
Jul 31, 2013 3:08PM
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lol

sounds to me more like the regular hospitals and their exploding bills are coming up short so they piss and moan about other greedy hospitals who are cutting their revenues

the rich and greedy will always argue money

+ why would someone want to pay 4 to 5 times more in a bill

something doesn't sound right to me either or

one thing it reminds me of is a leach and a mosquitoe

who can get more blood money

I certainly wouldn't pay that price insurance or not

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