The Texas Approach to Emergency Treatment

Private chains lobby to open ERs catering to the well-heeled.

Caption: A First Choice Emergency Room in Deer Park, Texas.

Caption: A First Choice Emergency Room in Deer Park, Texas.

Source: First Choice via Bloomberg

Holly Westerby was sitting on the sidelines of a YMCA field in Houston watching her 9-year-old son play flag football one Friday night in March when she noticed he kept shaking his hand like it hurt. She pulled him to the side and saw his thumb was purple. Westerby took the boy to the closest emergency room, a center called First Choice. In less than two hours, her son saw a doctor, got an X-ray, and had his fractured thumb put in a splint.

The ER that Westerby visited is one of 145 independent emergency centers that have opened in Texas since 2010, when the state became the first in the U.S. to license ERs with no hospital affiliation. Unlike traditional emergency rooms, they handle only basic cases that don’t require surgery or overnight stays. “If I thought I was having a heart attack, I don’t know that I’d go there,” Westerby says. “But for minor injuries, I just feel that the whole process is so much quicker.”

The Affordable Care Act was supposed to cut emergency visits by giving more patients access to primary care doctors, but a survey released on May 4 by the American College of Emergency Physicians showed the opposite has happened: Seventy-five percent of ER doctors reported an increase in patients over the past year, in part because there aren’t enough primary care doctors to see newly insured patients.

That’s good news for companies like Adeptus Health, based in Lewisville, Texas, which owns the First Choice Emergency Room chain. Adeptus has 52 emergency centers in Texas and an additional 12 in Colorado affiliated with the University of Colorado Health system. It’s paying lobbyists in other states, including Arizona and Ohio, to push for regulatory changes that would allow it to open ERs there. The company also has lobbyists in Washington. Since 2012 its patient volume has more than doubled and operating revenue has tripled, to about $211 million. “When was the last time you had a good experience in a hospital emergency room?” asks Brooks O’Neil, an analyst at Dougherty & Co., a financial research firm.

Outpatient emergency rooms have been around since the 1970s and were conceived largely as a way for hospitals to provide service to medically underserved areas like poor rural regions. Adeptus and other independent ER operators are inverting that model, catering to wealthy suburban patients who, when they run into medical trouble, don’t want to drive to urban hospitals and wait long hours. By law these ERs can’t accept Medicare and Medicaid, and some insurers don’t cover all their services. Many are owned or staffed by former hospital ER doctors weary of bureaucracy and stressful work environments. “Lots of my colleagues have said, ‘That’s it, I’m going to hang up a shingle and do it my way,’ ” says Dr. Howard Mell, a board-certified emergency physician and spokesman for the American College of Emergency Physicians.

Emergency centers charge prices comparable to those at hospital ERs, including fees that can run as much as $1,000 just for walking in the door, which they say are necessary to cover the cost of staying open around-the-clock and maintaining expensive diagnostic equipment. According to the Texas Association of Health Plans, a trade group that represents health insurers in the state, a typical bill at a free-standing emergency center is about $1,400, compared with about $200 at urgent-care centers, which generally take insurance but handle only minor emergencies such as sprains and cuts that require stitches. Don Nielsen, director of government relations for the California Nurses Association, which opposes independent emergency centers, calls them “a fraud on the public. They like to be able to charge the high reimbursement rates because it’s ‘emergency care,’ but in fact it’s not.”

First Choice centers are open 24 hours a day and staffed by board-certified emergency doctors. They have radiology labs and are equipped to handle basic emergency care, such as setting broken bones or stabilizing patients in cardiac arrest. Patients requiring surgery or advanced care are transported to nearby hospitals for treatment. In Texas, First Choice centers have opened in strip malls.

In June the National Association of Freestanding Emergency Centers, a newly formed trade group representing the industry, will hold its first national conference in Dallas. It was started by Bradford Shields II, an Austin lobbyist who spearheaded the 2009 push on behalf of independent ERs. He says, “Other states are starting to get very curious and calling to say, ‘If they can do it, why can’t we?’ ”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE