Free Standing Emergency Rooms: When Do They Make Sense?
Free standing emergency rooms are a relatively new and controversial development in the healthcare delivery system. Although there are a number of these facilities in certain areas of the United States, Alabama does not now have any free standing emergency rooms. This situation may change in the near future, and many healthcare observers are concerned that our state may see a proliferation of these facilities in the next decade or so.
 
Currently, the Birmingham area has two proposals pending for free standing emergency rooms. Brookwood has filed a certificate of need application to build the state’s first freestanding emergency room off U.S. 280 near Greystone in Shelby County at a cost of $14 million. This application is opposed by Trinity Medical Center and St. Vincent’s and is scheduled for a CON hearing in October. St. Vincents has filed its third successive letter of intent with the State Health Planning and Development Agency to build a free standing emergency room adjacent to its current facilities on 119 but has not yet filed its full application. 
 
Many patients are confused about free-standing emergency rooms and how they differ from urgent care centers. As opposed to urgent care clinics or centers, free standing emergency rooms seek to duplicate the complete complement of procedures and services offered by hospital emergency departments in acute care hospitals. Unlike most urgent care centers, free standing emergency rooms usually accept ambulance traffic. 
 
Free standing emergency rooms typically receive a much higher level of reimbursement than urgent care clinics. While most urgent care centers do not bill facility fees, free standing emergency departments are compensated for facility fees at hospital-like levels of reimbursement. In Alabama, urgent care centers are most often physician offices which are exempt from licensure and Certificate of Need review.
 
The proponents of these facilities generally argue that they will relieve overcrowding in overworked urban acute care hospital emergency departments. In addition, they argue that free standing emergency rooms “increase the availability of high-quality emergency care” in more convenient and readily accessible settings. Often, these facilities are designed to shift or retain patient market share in competitive markets.
 
Free standing emergency rooms have been most successful in rural areas where there is no nearby acute care hospital. Texas, in particular, has seen a significant number of free standing emergency room emerge in counties where the only acute care hospital has been forced to close for economic reasons. Where there are large distances between population centers and limited helicopter transportation, the free standing department may be the only facility that can provide any significant emergency care.
 
There are serious concerns about whether free standing emergency rooms are a good thing for emergency care. Will ambulance drivers and other emergency personnel be able to determine whether a particular patient is too sick for the free standing emergency room? Will patients lose valuable time by being transported to a free-standing emergency room and then being re-transported by ambulance to a full-service acute care hospital? There are also questions about whether the duplication of personnel and equipment between the acute care hospital and the free standing emergency room is a good thing for a healthcare delivery system already facing severe expense pressures.
 
The Alabama Department of Public Health has no present license category for free-standing emergency rooms. The Department has made clear that it will not license these facilities as hospitals. Moreover, that State Health Plan for Alabama does not have a category for these facilities, and review standards may be difficult for certificate of need purposes.
 
Medicaid is likely to be concerned about any expansion of emergency room care in a new type of facility. Both the Alabama Medicaid Agency and CMS have been working to move primary care out of more costly settings and to encourage the delivery of primary care in physician offices and outpatient clinics. Traditionally, Medicaid consumers have been higher users of emergency departments than the general health care consumer. With aggressive marketing efforts, the addition of free standing emergency departments in suburban or more convenient areas may work against these efforts to move primary care into more cost effective settings. 
 
If free standing emergency departments overcome these objections and receive approval in Alabama and prove to be a profitable endeavor, Alabama may see a wave of these facilities in suburban markets. These facilities may prove particularly effective in capturing market share for acute care hospitals that are sponsoring these facilities but may harm hospitals that operate only emergency departments at their primary acute care location.
 
 
Colin H. Luke is the Chairman of Balch & Bingham’s Business Law Section.
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