Improved ER observation units could cut readmissions, save hospitals nearly $1B

Study finds dedicated type 1 observation units also reduce length of stay
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Emergency room type 1 observation units could reduce readmissions and healthcare costs by nearly $1 billion a year, according to a new study published in Health Affairs.

The research team, led by Michael A. Ross, M.D., director of the clinical decision unit at Grady Memorial Hospital and Emory University Hospital, both in Atlanta, compared 2010 medical data from a case study of Atlanta observation units, Georgia's statewide discharge data and national survey and discharge data.

They found that in "type 1" observation units--units dedicated specifically to observation with clearly defined protocols--patients' lengths of stay were 23 to 38 percent shorter. Patients in these units also had a 17 to 44 percent lower probability of inpatient readmission. In addition, these units could save hospitals nationwide up to $950 million a year, according to the study.

"Furthermore, we estimate that 11.7 percent of short-stay inpatients nationwide could be treated in a type 1 unit, with possible savings of $5.5-$8.5 billion annually," the researchers wrote. "Policy makers should have hospitals report the setting in which observation services are provided and consider payment incentives for care in a type 1 unit."

Although hospitals with observation units have doubled in the last decade, units without the type 1 unit protocols are driving the inefficiencies and excess costs associated with emergency services, according to PBS Newshour. In these units, the article states, patients are often consigned to "observation purgatories" as they wait for better treatment.

Due to hospitals' emphasis on inpatient and outpatient care, they tend to overlook patients who "need more than six hours of emergency care but who might only need to spend 24 or 48 hours in a hospital if actively cared for," Ross told Newshour.

However, a July study in the Journal of the American Medical Association found that current observation care may be costing hospitals money rather than saving it, FierceHealthFinance previously reported.

To learn more:
- here's the Health Affairs abstract
- read the Newshour article

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