Medical Care, the journal of the American Public Health Association published a paper this month on the incremental cost to treat non-urgent outpatients in an emergency department setting versus an outpatient clinic. Using California hospital data submitted to the Office of Statewide Health Planning and Development (OSHPD) between 1990 and 1998 the data were used to estimate hospital cost functions, which were then used to test for
economies of scale and to derive estimates of both short- and long-run
marginal costs (excluding the physician expense component).. Hospitals without EDs, or hospitals designated as trauma centers, were excluded from the analysis.

Principal Findings: We found only weak evidence in favor of scale
economies and, in that context, we argue that long-run marginal costs
should be the preferred metric for judging the cost of treating
outpatient ED visitors. We estimate these long-run costs (in 1998
dollars) to be roughly $348 per visit for large urban hospitals, $288
for other urban hospitals, $203 for rural hospitals, and $314 overall.

Our results suggest that the marginal cost of an outpatient ED visit is
larger than is commonly believed. A key implication of this finding is
that hospital administrators need to think more carefully about their
nonurgent care policies, especially as they pertain to ED operations.

Not included in the study is news that early innovator hospitals are starting to implement lower cost urgent care clinics to treat out patients who present at the ER. These outpatient clinics are typically located in near by professional buildings, outside of the higher cost hospital.

Pictured right is an emergency room shot from Englehart and District Hospital in Ontario, Canada.