Study: ED costs may be three times higher than estimates

Time is money, goes the saying, and a new study by Brown University researchers strongly suggests that by factoring it in, the actual cost of hospital emergency department services may be as much as triple traditional estimates.

The findings could put a spotlight on ERs, which are a significant source of income and inpatient admissions for hospitals.

ER costs are estimated to comprise as much as 5.8 percent of total healthcare spending--far above the 1.9 percent figure that has been cited by the The Agency for Healthcare Research and Quality's medical expenditure panel survey, according to the study recently published in the journal Annals of Emergency Medicine.

"The ER has become increasingly important as a place where people go for acute unscheduled care, however there has been little rigorous analysis of its cost structure," Michael Lee, M.D., assistant professor of emergency medicine in the Warren Alpert Medical School of Brown University and the paper's lead author said yesterday in a statement.

Taking all of the adjustments for Medicare and Medicaid enrollees under consideration, the researchers conclude overall ER spending could total between 6.2 percent and 10 percent of all healthcare expenditures.

The research focused on the use of "time-driven activity based costing," a concept developed by Harvard University economists Michael Porter and Robert Kaplan. As a result, they accounted for time in relation to every task required to treat a patient in the emergency room.

"The real cost of providing emergency care has to do with accurately measuring the resources that are used, and time is an important variable to take into account," Lee said in the statement.

However, Lee also acknowledged that ER cost estimates widely vary. Marginal costs have ranged from $150 to $638 based on studies conducted by insurers.

To learn more:
- read the Brown statement
- here's the study abstract