The costs of visits to emergency departments

Many visits to emergency departments are for minor medical problems, and these visits are criticized as being expensive and economically inefficient. This study examines the marginal costs (the extra costs for an additional visit) of emergency department visits.

Monthly data on the costs of hospital and physicians' services from 1991 through 1993 were obtained from a sample of six community hospitals in Michigan. The data were analyzed with ordinary least-squares regression techniques to determine the ratio of marginal to average costs. Average and marginal costs were then determined for 24,010 visits during 12 randomly selected weeks in 1993. A visit by an individual patient was the unit analysis, and visits were classified as nonurgent, semiurgent, or urgent according to explicit criteria. Costs and charges were determined for all visits and were classified according to the degree of urgency.

For all emergency department visits, the average charge was $383, the average cost was $209, and the marginal cost was $88 (42 percent of the average cost). Thirty-two percent of the visits were classified as nonurgent, 26 percent as semiurgent, and 42 percent as urgent. For nonurgent visits, the average charge was $124, the average cost was $62, and the marginal cost was only $24. For semiurgent visits, the average charge was $312, the average cost was $159, and the marginal cost was $67. For urgent visits, the average charge was $621, the average cost was $351, and the marginal cost was $148.

The true costs of nonurgent care in the emergency department are relatively low. The potential savings from a diversion of nonurgent visits to private physicians' offices may therefore be much less than is widely believed.