Is outpatient emergency department care profitable? Hourly contribution margins by insurance for patients discharged from an emergency department.

STUDY OBJECTIVE: We determine the contribution margin per hour (ie, profit) by facility evaluation and management (E&M) billing level and insurance type for patients treated and discharged from an urban, academic emergency department (ED). METHODS: Billing and demographic data for patients treated and discharged from an ED with greater than 100,000 annual visits between 2003 and 2009 were collected from hospital databases. The primary outcome was contribution margin per patient per hour. Contribution margin by insurance type (excluding self-pay) was determined at the patient level by subtracting direct clinical costs from contractual revenue. Hospital overhead and physician expenses and revenue were not included. RESULTS: In 523,882 outpatient ED encounters, contribution margin per hour increased with increasingly higher facility billing level for patients with commercial insurance ($70 for E&M level 1 to $177 at E&M level 5) but decreased for patients with Medicare ($44 for E&M level 1 to $29 at E&M level 5) and Medicaid ($73 for E&M level 1 to -$16 at E&M level 5). During the study years, cost, charge, revenue, and length of stay increased for each billing level. CONCLUSION: In our hospital, contribution margin per hour in ED outpatient encounters varied significantly by insurance type and billing level; commercially insured patients were most profitable and Medicaid patients were least profitable. Contribution margin per hour for patients commercially insured increased with higher billing levels. In contrast, for Medicare and Medicaid patients, contribution margin per hour decreased with higher billing levels, indicating that publicly insured ED outpatients with higher acuity (billing level) are less profitable than similar, commercially insured patients.

Emergency department admissions are more profitable than non-emergency department admissions.

STUDY OBJECTIVE: We compare the contribution margin per case per hospital day of emergency department (ED) admissions with non-ED admissions in a single hospital, a 600-bed, academic, tertiary referral, Level I trauma center with an annual ED census of 100,000. METHODS: This was a retrospective comparison of the contribution margin per case per day for ED and non-ED inpatient admissions for fiscal years 2003, 2004, and 2005 (October 1 through September 30). Contribution margin is defined as net revenue minus total direct costs; it is then expressed per case per hospital day. Service lines are a set of linked patient care services. Observation admissions and outpatient services are not included. Resident expenses (eg, salary and benefits) and revenue (ie, Medicare payment of indirect medical expenses and direct medical expenses) are not included. Overhead expenses are not included (eg, building maintenance, utilities, information services support, administrative services). RESULTS: For fiscal year 2003 through fiscal year 2005, there were 51,213 ED and 57,004 non-ED inpatient admissions. Median contribution margin per day for ED admissions was higher than for non-ED admissions: ED admissions $769 (interquartile range $265 to $1,493) and non-ED admissions $595 (interquartile range $178 to $1,274). Median contribution margin per day varied by site of admissions, by diagnosis-related group, by service line, and by insurance type. CONCLUSION: In summary, ED admissions in our institution generate a higher contribution margin per day than non-ED admissions.