Increasing ICU bed capacity cuts diversions
Study: As diversions drop, hospital revenues rise
A new study published on-line in the Annals of Emergency Medicine finds that ambulance diversions can result in significant revenue losses for emergency departments and that increasing bed capacity in hospitals can decrease diversion and increase monthly net revenues.1 Using data collected between Jan.1, 2002, and Dec. 31, 2004, at the Oregon Health and Science University Hospital, Portland, the researchers determined that:
- Every hour of ambulance diversion costs the hospital approximately $1,100 in revenues.
- When the intensive care unit beds were increased from 47 to 67 and ambulance diversion decreased, the hospital gained approximately $175,000 per month in additional revenues generated by ambulance patients.
- Those additional revenues reflected a 10% increase in the hospital's ED revenues.
Oregon Health and Science is a 400-bed, acute care teaching hospital with a Level 1 trauma center in an urban area, which treats approximately 43,000 emergency patients each year. "We took advantage of a natural experiment," explains Chris Richards, MD, chief of acute care and a co-author of the article, who notes that prior to the research, there had been numerous discussions about having trouble getting ED patients up to beds in the hospital.
"We were active in various meetings making this known to administration," Richards adds, but he concedes that surgery needs were probably a more critical factor. "High-margin services always are," he says. "When we have trouble getting our patients admitted, it's not perceived as a high-margin problem, but when cardiac surgeons can't operate because patients don't have beds, that are another story."
Thus, when a new cardiac intensive care unit (ICU) opened in the hospital, it was an opportunity to show the cost of diversions to the ED and to the hospital as a whole. "We tried to figure out the economics of the situation," Richards says.
This was an empirical simulation, adds K. John McConnell, PhD, lead author, an assistant professor of emergency medicine at Oregon Health and Science University (OHSU) and an economist in the OHSU Center for Policy & Research in Emergency Medicine. "We had two years' data, and we could see what patients were coming in and what the revenues were," he says.
Calculating the economics
The researchers used three sources of data: A radio frequency identification (RFID) patient tracking system, hospital financial data, and a log of ambulance diversion times and types. Ambulance diversion and revenues were analyzed hour by hour and also in eight-hour blocks of time.
"The hour-by-hour calculation was to develop something that made sense to the ED manager or hospital manager: What would it cost if we were on divert for an hour?" McConnell explains. "For the eight-hour blocks, we wanted to see if there were certain times of the day when diversions were particularly costly. So, for example, going on divert on Friday night is more costly than on Tuesday morning."
With the addition of the new ICU beds, total diversion decreased from an average of 307 hours a month to 114. "We were able take those figures and simulate what revenues would have been if we were not on divert and what the cost of an hour of diversion was," McConnell explains.
As impressive as the numbers are, other ED experts have calculated even higher costs per one hour of diversion — as high as $5,400 — by looking at emergency medical services (EMS) patients only during the busy hours of the day and by asserting that diversion doesn't get used in the middle of the night. However, Richards disagrees with that approach.
"When I first hashed over the data, I thought the numbers were low, but they are real," he insists. "You have to calculate the middle of the night, as well as the fact that some of these patients are uninsured."
Whichever way the numbers were calculated, the additional beds in the ICU had a clear impact on the ED staff, says Richards.
"One of the things that some ED managers know — and some perhaps don't — is that staff morale for practitioners is severely impacted by having to hold on to these patients for an extended period of time," he notes. "As the boarding times went down, we saw an impact on staff morale, which was positive."
There also are patient safety issues involved, he continues. "I am not an ICU doc; they are better at it and should take care of those patients," Richard asserts. Finally, he says, patients are more satisfied when flow is smoother. "And when you can get someone straight to a bed and they are less stressed, the providers are also happier," Richards says.
Based on the findings of the study, McConnell says ED managers should lobby for addition ICU beds in their facilities. "But it's a complex issue," he warns. "The total impact on hospital revenues is small — less than 1% — so fighting an effective battle to reduce diversions means you need to show the effects on patient satisfaction and outcomes."
Diversion is not a revenue neutral area, Richards adds. "Since the ED is 30% of your volume, if you bring in more revenue and increase customer satisfaction, they have to think about it," he says.
Reference
1. McConnell KJ, Richards CF, Daya M, et al. Ambulance diversion and lost hospital revenues. Ann Emerg Med DOI: 10.1016/j.annemergmed.2006.05.001.
A new study published on-line in the Annals of Emergency Medicine finds that ambulance diversions can result in significant revenue losses for emergency departments.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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