Hospitalists and the ED revenue stream
EXPERT ANALYSIS AT A MEETING ON REIMBURSEMENT SPONSORED BY ACEP
Total urgent care start-up costs range from $600,000 to $800,000. Ongoing expenses include rent, personnel, practice management, legal accounting insurance, billing, equipment and maintenance. "Providing higher-acuity services – Level 3 and Level 4 ER services seems to be the trend right now," he said. "A typical site may generate $100-$120/visit."
The general recipe for success is to have 25 patient visits per day, which translates into about 600 patient visits per month, or $60,000/month in revenue. "Some combination of patient revenue based on your contracted rate and volume needs to exceed your fixed cost," Dr. Granovsky said. "Good payer contracts are key. Before you spend a lot of money to open an urgent care clinic, do a little research to find out what your contracted rates will be. If those rates are poor, you’ll never make your money back. Partnering with a hospital is a conservative way to do it."
• Freestanding EDs. These facilities are typically owned and operated by a hospital or by a group of emergency medicine physicians. The business model can be profitable but many states require a Certificate of Need (CON) process in order to open one. "Unless you are a hospital it’s very hard to get through the CON regulatory process," Dr. Granovsky emphasized. "It’s expensive, daunting, and the cards are stacked against you. But some states, including Texas, Arizona, and Colorado, don’t require a CON. That’s one of the reasons why freestanding emergency departments owned by entrepreneurial physicians have prospered in those states."
Freestanding EDs can perform pretty much all the essential functions of a hospital-based ED except admit patients. As in the case of urgent care centers, location determines your payer mix. They may or may not participate with Medicare and Medicaid. Some freestanding centers can break even with as few as 12 patients per day.
"A single patient can potentially generate more than $500, even more if the patient requires sophisticated ancillary testing," he said. "You typically need to have a couple of million dollars to get started. Large ED groups are typically ones pursuing this, or you need investor partnering."
Dr. Granovsky said that he had no relevant financial conflicts to disclose.
