A study in the Annals of Emergency Medicine found that commercially insured patients who went through an outpatient emergency department led to significantly higher profitability margins at the hospital than Medicare and Medicaid patients.
Emergency physicians from Baystate Health in Springfield, Mass., Oregon Health & Science University in Portland and George Washington University in Washington, D.C., analyzed more than 523,000 outpatient ED encounters between 2003 and 2009 at an urban academic medical center. They tracked the average contribution margin per hour — or the average contractual revenue minus direct clinical costs — and they also looked at profit by billing level and type of insurance.
The researchers found that overall, Medicare and Medicaid ED patients led to much lower profit margins. The result isn't surprising, considering government payers generally reimburse hospitals less, but researchers also found profitability erodes even more for higher-acuity Medicare and Medicaid patients.
For example, the contribution margin per hour for commercially insured ED patients was $177 at the highest billing level. For Medicare patients, that figure was only $29, while the Medicaid figure was $16. The Medicare and Medicaid margins at the highest acuity level also decreased from lower billing levels, whereas margins from commercially insured patients increased from lower billing levels to higher billing levels.
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