Downsizing: One ED finds strength in smaller numbers

When the state of Washington decided to put its Medicaid population in managed care, the ED at Mary Bridge Children’s Hospital in Tacoma saw the number of its MCO-covered patients jump by 40%, its volume drop by 30%, and its low-acuity business disappear.

Yet, two years later, the ED is "happy as a clam," claims Ted Walkley, MD, the hospital’s Director of Pediatric Emergency Services.


The answers lie in a unique staff redesign, proactive arrangements with both the insurance providers and primary care physicians, and a commitment to re-educating the Medicaid population long ignored by primary care.

"What was clear from the beginning was that this was a problem with access," says Walkley of the loss of the low-acuity patients. "This was a population that was not [previously] being seen in primary care."

Preparing for the shift

Mary Bridge was fortunate in that it was given several months to prepare for the move to managed care, Walkley says.

The new plan was implemented by the state on a county-by-county basis. The state Medicaid took the money it had been using to reimburse providers caring for its clients and put it in a risk pool to be shared by insurance companies contracted to plan care for these people, Walkley says. The insurance companies contracted with PCPs on a capitated basis.

And, to encourage their clients not to use the emergency room, the plans decided to cut the already low reimbursement rate to emergency doctors.

"They said, ‘We want to get all of these people out of this expensive place,’" Walkley says. "So, if treatment in a primary care physician’s office costs $20, then we’re only going to give the emergency department $15.

"It doesn’t take a genius to figure out [that] somebody’s not going to make any money."

Going after urgent care

To combat this, the hospital originally planned to start its own urgent care center, a move that has become common across the country as more hospitals encounter similar situations, Walkley says. But, they soon realized that, for them, it would be disastrous.

While collecting data on the feasibility of expanding urgent care services in their department, they made an interesting discovery.

"These people are simply not coming in," he says. "They are getting seen in the primary care setting."

Coupled with the fact that the reimbursement rate was so low, it simply made little sense to fight the losing battle, Walkley says.

"We would have just siphoned off more from the ED. This is not a population that was paying for itself," he says. "We decided to get out of competition with primary care."


Instead of expanding their business to compete, the ED focused on cutting its overhead and restructuring, Walkley says.

By making use of a hospital patient-focused care initiative, the department redesigned its staff, using attrition and transfers to reduce the number of people working. The department also instituted an "acuity-based points system" to evaluate nurse-staffing needs.

The system allots a certain number of points for duties performed based on the severity of a patient’s illness, the time it takes to perform the tasks (such as drawing blood and starting IVs), and the level of skill involved, Walkley says.

"Because of this initiative, we were able to cut our variable costs," Walkley states. "The hospital has been able to cut its fixed costs."

The department looked at several staffing models based on inpatient acuity before deciding to design their own system, Walkley says. While other models looked at the level of acuity, they didn’t take into account the number of tasks performed simultaneously in an ED, Walkley feels. "We found they didn’t really reflect the ER workload well."

During the hospital-wide initiative, the department performed several work-motion studies and used the data to come up with their system.

Because the new staffing model takes into account different levels of acuity, the department was better able to justify its staffing needs to hospital administrators when they questioned the decline in patient volume, he says.

"We lost 30% of our volume, but not 30% of our staffing. We were able to create a staffing model related to our needs."

Providing longer, more intensive care

Although the department decided not to focus on the urgent care market, that didn’t mean it would not expand into other areas, Walkley says.

"They [the PCPs] didn’t want to give us the low-acuity patients," Walkley notes. "They said, ‘We’re staying open until nine. We want them in our office.’

"We decided to get out of the urgent care business, to get out of competition with PCPs, because there wasn’t the need. But, we decided to look at what they did need."

Because capitated primary care doctors wanted to see as many as they could of the lower-acuity patients they could treat quickly, the department decided to go after the higher-acuity patients they could not treat quickly, but who might not need to be admitted to the hospital.

"We could take the child with abdominal pain, the dehydrated child, and rehydrate them and watch them here, manage their care in the ED without having to admit them," he says. "To some extent, we went into competition with our own hospital."

Because a child admitted to the hospital would cost the primary care physician money, they are reluctant to send them, but it takes a great deal of time to manage those in-between cases in the office, Walkley says.

That’s where they come in, he says. The department is marketing itself to the primary care community as a cost-effective alternative to inpatient care for some of these cases.

"We said, rather than admit the child, give them to us," he states. "If we fail, the amount we added to the cost would be minimal; but if we didn’t, the cost would be less than one day in the hospital."

In addition, the stay for a child admitted after emergency department care tends to be shorter than if they were admitted to the hospital directly, Walkley says.

"If you aggressively treat them early, then they have a shorter stay," he says.

"Because the practitioners are now capitated, they are a little afraid of the hospital. We can offer a very valid alternative to inpatient service. So, within the hospital we’re a hero for holding down costs, but they can’t quite figure out why their inpatient volume isn’t up. We very rapidly got into observation medicine."

"Our volume was down, so we have more time to spend on the sicker patients," he emphasizes. "An asthmatic child with an exacerbation can occupy a bed in a room for a couple of hours; a nurse is just needed to keep checking on him."

Setting up a good foundation

What allowed them to accomplish all of this were strong, cooperative relationships with PCPs and the payers managing the money, Walkley says.

In negotiations, the department, payers, and primary care providers established agreements on authorizations, definitions of an emergency, what constitutes a medical screening exam, triage, and provision for a screening fee for the department when they sent patients out for treatment, Walkley says. "We had the groundwork laid out from the beginning."

The process was also made easier because the department makes a concerted effort to work with the PCPs.

Instead of battling over authorizations, ED physicians make every attempt to send over the patients that should be seen by their PCPs, and to send more patients during the day, when it is more convenient for them to be seen.

That way, when it’s the middle of the night and the physician is called for authorization, he is more apt to authorize care in the department, Walkley says.

"We teach people how to access the system. We send them to the PCP during the day because that is where they belong," he states. "Now, it’s 10 o’clock at night and I have a child that needs to be seen, and I’ve developed a relationship with the primary care provider."

"I try never to call for authorization," Walkley says. "I always call to have a child seen. In reality, if it’s 2 in the morning and it’s not a real emergency, the child would probably be fine until 7 a.m. [when the doctor’s office opens]. But, I call the physician and say, ‘I think the child needs to be seen.’ If he doesn’t want to come in, he’ll probably say go ahead and treat them there."

The process is not without flaws, he admits.

"Are there problems with sending them out? Sure," he says. "You’ll have that case of a child sent out with a fever, and the primary care physician doesn’t do the workup that you would have done, and it turns out to be meningitis. That’s always going to be there."

The authorization process is the most difficult part of working in a managed care environment, says Jonathan Chalett, MD, a pediatric emergency room physician at Mary Bridge.

Patients often must wait while their primary care provider is called, first to authorize treatment in the ED and, later, to authorize further tests or admission to the hospital if necessary, Chalett says. He and the other physicians are often put in the difficult position of dealing with angry and frightened patients who don’t understand the situation, he says, particularly when their PCP does not authorize the trip to the ED.

"I try to explain to them that it’s not that I don’t want to see them, but that their insurance company doesn’t want to pay [for the visit]," says Chalett.

PCPs don’t always see the whole picture when deciding who should be treated in the ED, he notes. Parents who lack available transportation during the day and who are unfamiliar with the office hours and routine of their physician make up a large number of those who present in the ED.

Parents with a sick child in the middle of the night may not be willing to wait until the doctor’s office is open the next morning to take their child in, Chalett says.

"I don’t think that’s abuse [of the ED]," he says. "That parent is not out to rip somebody off. No one wakes up in the middle of the night and just decides to come to the ED for their medical care. It’s not a place anyone wants to be."

The department tries to identify patients needing preauthorization as soon as possible to reduce the delays, Walkley says. Depending on when the patient is identified as managed care, the registration person, a nurse, or the ED physician may make the call to the PCP.

If the call is made during the registration process, the person at the front desk will let the physician know whether or not the visit has been authorized, then he or she can then decide what to tell the patient, or whether they need to talk to the PCP again, Walkley says.

Authorizations are always going to be a difficult proposition, Walkley says, but there are some ways to minimize the risks.

"We have the rule that anyone can authorize, but only a physician can deny," he states. "That means, if I call the PCP and the receptionist answers and says it’s OK, then I can see him. If the person answering the phone says no, then we have a physician-to-physician conversation."

The department also audits 100% of its denials, Walkley says. This means they periodically sit down with their payers and look at the cases that were not authorized for payment.

They take an unusual approach.

"The thing is, you go in the meeting and tell them you’re going to give them some up front," he explains. "You say, we have 50 denials, and I am going to dispute you on 40, because 10 of them, we admit, were our fault. . . . We didn’t call for authorization and we should have. Then you go back and educate your staff."

The drawbacks

Not everything about the new system is better, Walkley notes.

"When you get rid of the low-acuity population, you realize they are a nice buffer to have," he admits. "The other night, I had nine children with IVs [in the department]. As you reach capacity, your costs go up."

It then becomes vital to have the data showing how the money was spent and why it was spent wisely.

You have to be able to go back to the hospital with the data to show how you reduce cost overall, Walkley says.

He also hopes to prove to insurers that cost savings come by educating patients about when to go to the ED, not from the cumbersome authorization process currently in place.

"We have to convince insurance companies that they are not saving money because of authorizations," he says. "Authorizations take a lot of work. If I have a nurse on the phone, I have a nurse who is not providing care. If we lost the authorizations, we’d be able to cut costs further."


The change in philosophy has benefits beyond the financial, Walkley emphasizes.

By freeing themselves of the low-acuity fevers, common colds, and other minor complaints that were clogging the department, he and the other physicians are able to spend more time with children who truly need their specialized care.

To illustrate the point, he relates a recent experience with a toddler brought in with a low-grade fever.

Walkley called the PCP shortly before his office closed. The doctor said he would see the child that night in his office, but, as they were ending the conversation, he asked if Walkley could take another child who had come to the doctor’s office with a lung infection that could develop into pneumonia.

"He says, ‘Can I send him over?’" Walkley relates. "He gets the mom with a fever phobia who didn’t know how to access the system. I get to do what I am trained to do."

Though the experience is working well at Mary Bridge, Walkley says he understands the frustration that other emergency medicine practitioners feel.

"The premise of managed care is to get them out of the ED, because of the high cost," he says. "As an emergency physician, I bristle when I hear this, because this is a population [primary care] wouldn’t see before."

For departments facing a similar situation, Walkley recommends a thorough examination of the unique needs and position of the ED and hospital, not relying on what has worked elsewhere.

Have the data to back up what you want to do, he says. And do some strong negotiating up front with both payers and primary care providers.

"I truly believe we are giving better care than we were before, he concludes. "It didn’t start out that way. It started out with concern for our livelihood. But, I practice emergency medicine for a reason; I could have stayed in straight pediatrics. I like taking care of sick kids. I like this work."