Observation Unit — Between ER and Hospital

Laura Landro of the Wall Street Journal reported on a growing trend in US hospitals.  The trend is the “Observation Unit”.  In hockey terms it is the penalty box where hospitals put patients they can’t send home but can’t admit, at least for a few hours.

The origin of this idea may have come from English hospitals.  Those hospitals run at almost 100% occupancy.  So, when a patient from the ER needs to be admitted there is a delay to wait for a room.  Those patients  get put in a big room next to the ER with several gurneys, a few nurses,  and lots of curtains (the observation unit).  The patients do get tests and treatments but they wait for a room.  As it turns out, some of the patients get better and don’t actually get admitted — they go home — the rest eventually go to a hospital room.  In England hospital care is free and the hospitals don’t have to worry about insurance or Medicare rules that separate  outpatient and inpatient charges.

US hospitals have plenty of beds available but US hospitals do have to worry about insurance and Medicare rules.  Care is not free and if a hospital makes a mistake (like admitting for indigestion) they don’t get paid.  And, if a doctor makes a mistake and sends a patient home who should have been admitted (for a heart attack) they could be in legal trouble.  Consequently, unlike the English hospital that needs to hold patients to wait for a bed the US hospitals need to hold patients because of red tape and legal worries!  It’s hard to tell which is worse.

The Wall Street Journal article puts a positive spin on the “new” idea:  “when operated efficiently observation units have been shown to reduce health-care costs and improve treatment”.  Obviously there is a balance of forces between the Hospital that makes money and the insurance company that looses money with each admission.  Regulators try to develop rules to speed evaluation and treatment so some patients can go home safely without a hospital admission and the huge associated costs.  Any patient who can bypass the hospital will also avoid the risk of hospital errors and exposure to hospital acquired infections.

Patients have two main concerns:

1) Getting the right care the first time and not coming back sick.   The unit may provide a little longer time to get test results and see if treatment is working which is good unless unnecessary tests are being done.
2) Minimizing out of pocket cost.  A person without insurance would get a lower bill by avoiding the hospital but having both the cost of observation and hospitalization is a real possibility.   The current trend for insurance  is to shift a higher percent of outpatient charges to the patient compared to inpatient charges.  So, depending on what a person’s insurance covers, there might be higher out of pocket expense for using observation.

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