Observation units key to the future

Forward-thinking ED managers and hospital administrators are increasingly using observation units to monitor certain types of patients instead of admitting them. Some experts suggest these units may even be the key to the survival of the ED.

"This will become a product line for hospitals which survive," predicts Tony Joseph, MD, MS, the former chairman of the American College of Emergency Physicians’ (ACEP) section on short term observation services and the founder of American Medical Consulting in Columbus, OH. "Furthermore, this is where the ED will fill a niche."

Observation units, also known as rapid treatment units or clinical decision units (CDUs), are clearly gaining in popularity among ED staff, patients, and administrators. "They are win-win situations which produce excellent outcomes. Patients are more satisfied, and the insurance payer loves it because they end up paying much less," says Robert Andelman, MD, FACEP, formerly the regional director of emergency services for Ohio Permanente Medical Group, and a former chairman of ACEP’s section on observation services.

"If we believe that emergency medicine is either going to die or develop a central hub mentality, this is key to our survival," says James Espinosa, MD, FACEP, director of the ED at Overlook Hospital in Summit, NJ, and founder and immediate past chair of ACEP’s section on quality improvement. "Observation units fold so beautifully into where we’re going as a specialty that I think that every ED manager needs to seriously ask themselves why they wouldn’t have an observation program in place."

Several categories of patients are appropriate for observation. "With patients needing diagnostic evaluation of a critical syndrome such as chest pain, abdominal pain, syncope, new seizure, shortness of breath, or fever, the physician uses the period of observation to clarify who really needs hospital admission and who does not," says Louis Graff, MD, FACEP, the author of the textbook Observation Medicine and assistant director of emergency medicine at New Britain (CT) Hospital.

The most common chief complaint in that category is chest pain, which typically comprises about a quarter of patients in observation units. "In chest pain patients, the physician is trying to identify who has acute myocardial infarction," says Graff.

Approximately 20% of EDs currently have chest pain observation units in place, and these units have been proven to reduce the risk of missed myocardial infarctions, an all-too- common occurrence in the ED.

"No one seems to be able to get below a 4% missed MI rate using non-chest pain observation technologies. We just can’t seem to guess it right, so this gives you an opportunity to reduce that rate," says Espinosa. About 36,000 MI patients are mistakenly sent home with no diagnosis each year.

The legal risk is potentially great. "Every study of closed claim malpractice data that’s ever been done has demonstrated that failure to treat MI is the number one cost of dollars paid, so you are attacking the largest problem in anybody’s potential closed claim set," notes Espinosa.

Thrombolytics establish higher standards

Legal risks have actually increased with the advent of thrombolytic drugs. "Before, you were able to say, I missed the MI, but the only thing we’d have been able to do was put him in the hospital and make sure he didn’t have a malignant dysrhythmia," says Andelman. "Now, with thrombolytics, there is a treatment, so that opens you up for establishing a causal relationship [by] deviating from the standard of care. Even if you miss fewer MIs, the judgments will come out much higher."

Observation units can reduce these increased risks. Since Ohio Permanente’s chest pain observation unit was implemented, no MIs have been overlooked, notes Anderson.

The observation unit dramatically reduces the cost of doing an MI rule-out using serial cardiac biomarker testing and continuous ST-segment monitoring. Of the patients put into Ohio Permanente’s observation unit, 86% were discharged instead of being admitted. The discharge diagnoses of patients who were admitted directly from the observation unit show that 2.1% had MIs. "Of the 710 patients who normally would have been admitted to the hospital, only 14% of them really had to come into the hospital, and we were able to identify those in a very cost-effective manner," says Andelman.

While the cost for an MI rule-out in the CDU is roughly $1,000, it’s three or four times that amount in the hospital, says Andelman. "Since only a quarter of our patients are chest pain, we’re able to expand that savings," he adds.

"Each of our observation units probably saves us between $8 million and $10 million a year," he says. "These are extremely cost-effective ways of managing patients as we continue to shift from an inpatient to an outpatient basis."

Patients who will be returned to baseline with intensive short-term therapy also are candidates for observation units. "They also give you a place to observe the multisystem-failure patient who is the bane of ED existence," says Andelman.

"For example, the guy from the nursing home with a history of chronic renal failure, coronary artery disease, and hypertension, who comes in feeling dizzy and not well," says Andelman. "Meanwhile, you can develop your community resources, home care or nursing home or whatever, and this patient who would have had a five-day stay is turned around in 24 hours."

Units improve case management

Observation units can even save lives. At Carolinas Medical Center in Charlotte, NC, the ED’s chest pain improvement team reviews data from the observation unit to prove this point. "We have clearly identified chest pain patients who for all the world [seemed to have] fairly low-risk noncardiac chest pain, but were later identified to have potentially life-threatening coronary artery disease," says Lee Garvey, MD, medical director of the chest pain evaluation center at Carolinas Medical Center and clinical research director for department of emergency medicine. "The observation unit made a real difference in their management."

Other EDs report similar observations. "We have identified a number of patients who have received thrombolytics or other interventions based on ruling in while they were in the observation center," says Espinosa. "To our knowledge, we haven’t missed a single MI since we’ve been doing this."

Asthmatic patients can also benefit from observation. "Approximately four out of five patients with acute asthma can be successfully treated in the first four hours in the emergency department," reports Graff. "Without observation, the 20% who have not ‘broken’ will have to be admitted. With an additional eight hours of observation, 80% of these asthmatics can successfully be treated and discharged home."

Studies that followed asthma patients in observation units found that their outcomes were as good as the outcomes of those who were admitted. EDs report that observation has reduced risks for some asthmatics who would have otherwise been sent home. "Some asthma patients who have made some signs of improvement were retained, got worse, and required more aggressive care," says Garvey. Those patients would have been at greater risk if discharged home, he adds.

The attitudes of health care administrators toward observation units continues to warm. "They understand this has to be done because they need to get patient-focused treatments so the patients are out sooner with less cost," says Andelman.

‘The advantages have been phenomenal’

Time has shown there is no basis for resisting the trend toward observation medicine. "The initial fear was that this would become an additional site where the physician would put someone he doesn’t want to make a decision on," says Andelman. "That just hasn’t happened here. At least 90% of these patients would have been in the hospital, so the advantages have been phenomenal."

However, hospitals in regions not yet heavily penetrated by managed care may still see observation units as a threat to the bottom line. "In areas where physicians aren’t capitated, hospitals are still concerned about losing billing possibilities, but they can still see the patient in the observation unit and charge as an office visit," says Andelman.

In some cases, administrators still believe that observation units invariably result in lost revenues. "The problem is that reimbursement for hospitals is in a schizophrenic place right now, with some of the country in a heavily capitated environment but most in a mix between fee for service, discounted fee for service, managed care, and capitation," says Espinosa.

Administrators may be torn between protecting their revenues and satisfying MCOs. "More and more, when administrators go to contract tables, they are asked if they have an observation program in place," says Espinosa. "On the other hand, if they are getting paid twice as much to admit them, why would they want to reduce their revenues?"

Observation units require a long-term commitment. "That includes the presentation of not only baseline data, but a business plan, which is a higher level of commitment," says Espinosa. "If you can show you have substantially decreased the cost of medical care, you’ve got the solid underpinnings for a really good business plan."

Administrators are increasingly noticing a direct correlation between the use of the observation unit and leverage with MCOs. "If you put in these systems that HMOs now require, you are in a better position to compete for contracts," says Andelman. "One must now look at the intersection of technical quality, service quality, and financial responsibility. Where they intersect is now best practice."

HMOs themselves are increasing use of observation units in their EDs. "In this HMO, we were able to develop this without turf battles, which opens up tremendous possibilities for benchmarking," says Andelman.

Improving outcomes, reducing costs

Observation units fit perfectly with the evolving changes in today’s managed care era. "You need to ask the questions, does this improve clinical outcomes and reduce cost?" says Joseph. "If both answers are yes, you will get worthwhile consideration from health care administrators and HMOs."

Observation units complement the goals of managed care and capitation schemes. "A few years ago, under fee for service, maybe observation units weren’t such a good idea because the hospital might want to collect that fee for admission. But under capitation, observation units attached to EDs become extremely cost-efficient," says Joseph.

Opinions vary as to the number of beds needed in an observation unit. As patient volumes increase, it’s important to regularly assess the unit’s size. "Up to 10% of your daily volume could go to the CDU," says Andelman. "That gives you an idea of how many beds you need."

As patient volumes in Overlook’s chest pain observation unit grew steadily from 30 patients per month to 70 per month within the past three years, the unit expanded accordingly. The two-bed unit was replaced with a dedicated four-bed suite adjacent to the ED, and the original unit became a stress lab.

The size of the center increased proportionately with patient volume. "We did calculations after assembling baseline data and did some statistical analysis to see what size center would be needed," says Espinosa.

The acuity of diagnoses seen in the observation units can affect staffing needs. "Your staffing really depends on what acuity you start putting patients in," says Andelman. "As you push the envelope more and more, you need to look at your staffing ratio. If you’re putting in a lot of patients who normally would go into the hospital and who have the potential of going bad, you have to be sure you are appropriately staffed."

It’s important to build in as much flexibility as possible. The eight-bed observation unit at Carolinas Medical Center has four beds equipped with a hard-wired bedside monitor used principally for chest pain patients. The remaining four beds have a portable monitoring system, which can be used for either routine monitoring or an overflow of chest pain patients. "Any of the beds can be used for anything; we mix it up depending on our need," says Garvey.

Observation as an extension of the ED

Observation units are an integral part of the ED’s future, emphasizing an expanded role. "Observation units need to be part of the management of the emergency department," says Espinosa. "It’s a weak model to think of it as separate from the ED."

It’s crucial that observation units be run by the ED, he says. "Emergency medicine needs to maintain ownership of this and develop expertise because it is our future," says Andelman. "Just as we did in toxicology and EMS, we will become experts and increase our value to any organization and guarantee our future and earnings."

There are several reasons emergency medicine is the appropriate specialty to oversee an observation unit, he says. "We’re experts in critical care and outpatient medicine, we’re familiar with short-term intervention, we’re staffed, open, and operational 24 hours a day, and we’re adept at coordinating multidisciplinary care on a short-term basis," he says.

Experts who feel the ED should be the site for all unscheduled care say observation units fit right into this picture. "The observation unit and the ED are two contiguous areas," says Andelman. "I have fixed overhead. The only way you can decrease my cost in emergency medicine is to send me more patients." Observation units do precisely that, increasing patient volume in the ED with patients who would otherwise be admitted.

"With managed care, we’ve essentially been given a bill of goods that we are going to truncate our services down to emergency only, which is only 10% of what we actually see," says Andelman. "Therefore, we’re going to be a service that is of no use in the future, and/or we are going to price ourselves out of the market because to take care of 10% of the patients at our overhead cost is ridiculous."

Units aid outcomes research

ED managers should use observation medicine as a tool to follow patient outcomes, says Espinosa. "This is a very practical model of outcomes management that’s within our scope," he adds. "We need to build information systems to tell us what happens to these people downstream and find out how satisfied they are."

It’s important to maintain control of this cost-cutting unit. "Already other disciplines are trying to take this over, but they can’t do it as well as we can," says Andelman. "They don’t have the ‘treat ‘em and street ‘em’ mentality that is necessary, and we already have a physician on site who can do acute care intervention if necessary, and it can be done without any patient-safety sacrifices."

Observation units will play a role in the survival of hospitals, and the ED can increase its leverage by running them. "Hospitals need this ability to identify the subsection of patients who need only short-term management," says Andelman. "Otherwise, they will lose as they go to Medicare and physicians become more and more capitated."

The time is now to establish control over the observation area, says Andelman. "We have a free ride right now to learn the business of emergency medicine from administrators," he adds. "We can learn the business side of it, but they cannot learn to practice medicine. We must learn what we need to, and go out and stake our claim and become major players."

Managing an observation unit means contributing to cost-effective medicine. "We have become the true gatekeepers at that very cost- sensitive inpatient-outpatient interface," says Andelman. "We can make a decision that saves $10,000, where nothing had to be done. That’s where our future value will come from — instead of downsizing, we will become the linchpins in managed care."

Here are some specific benefits of observation units observed by ED managers and physicians:

Patients who need specific education are identified.

"You can look at the CDU as a microcosm of patients who have failed in their disease treatment, particularly the asthmatic or patient with congestive heart failure," says Andelman. "You can start giving those patients more intense attention along with instructions for home, and do some case management. If you follow them along you’ll see their consumption of resources go down tremendously."

Physicians are exposed to patient outcomes.

Observation units also provide an educational benefit for physicians. "This expands the scope of ED practices," says Andelman. "Not since residency have I seen a patient in a continuum of disease; now I see them for 24 or 30 hours. I can take that continuum of disease I have learned and put it back into my practice."

Better relationships are established with patients. Some experts suggest that spending more time with patients can improve the doctor patient relationship, thus reducing legal risks. "The idea that the more time you spend with a patient, the higher the risk of malpractice, is simply untrue," says Andelman. "We actually get more bonding with a patient, and we have the time to show them that this care is appropriate. If anything, I think the risk goes down."

Patient satisfaction is increased.

The average length of stay in the ED’s observation unit is nine hours, which is appealing to patients who want to avoid extended hospital stays. "Without a doubt, you are offering patients something that is a value-added service," says Espinosa. "We now have patients who are less afraid to come to the ED because they won’t be incarcerated for three days. The rooms are private and large enough so families can come in and visit, and there is fax and phone capability so businesspeople can still keep in contact with work."

Facilitation of specialist consults.

With longer stays in the observation unit setting, specialists are more likely to spend quality time with patients answering questions. "The cardiologists are less pressured because now they’re able to come in when they can and talk to these people," says Espinosa.

Patient flow is streamlined through the rest of the ED. "We also use our monitored beds on our observation unit as a holding area for patients who are going to be admitted upstairs," notes Garvey. "Typically, there is a crunch for monitored bed availability, and before we had the monitoring function in our observation unit, these patients would back up in the acute care area in our ED waiting several hours for the availability of a monitored bed."

As a result, other acutely ill or injured patients wouldn’t have access to those acute care beds. "Now, once we plan to admit a patient, they can await the admission in the observation unit, which frees up the acute care area. That’s been a huge help for us."