August 9, 2014

As free-standing ERs’ business grows, so does backlash

Patients, insurers balk at high out-of-network rates.

A First Choice emergency medical center popped up here last year where a Blockbuster Video outlet once stood, near a strip center with an Albertsons supermarket, a Subway sandwich shop and a UPS store.

Where customers once lined up to rent Finding Nemo, they can now be whisked before a doctor before even finishing their paperwork. The gleaming new facility has the latest equipment, from a CT scanner to a portable X-ray. An in-house lab provides quick test results. There are free snacks and a Keurig coffee machine, and a well-appointed children’s examining room that has an original undersea wall mural and cartoons on the TV.

By locating in well-trafficked, convenient and often affluent areas where potential customers already shop, such free-standing medical centers provide an easy alternative to hospital ERs with their long waits and sometimes gritty settings. Nationally, they’ve doubled to more than 400 since 2009, according to Kaiser Health Care News.

Yet there is a growing backlash to the lucrative medical facilities, where sprained ankles, stitches and other simple procedures can cost upward of $1,000. They have drawn angry complaints on Yelp and And health insurer Aetna is suing two ER centers in Texas, alleging fraud.

Since a 2010 licensing law took effect in Texas, such well-equipped but compact facilities have rapidly expanded from a handful to 101. And many more are coming. They have names like Elite Care Emergency, E-Care, Complete Care, Legacy ER and 24/7 ER. Some, like Sacred Heart Emergency Center and St. Michael’s Emergency in Houston, sound like they’re part of church-related hospital groups but actually are for-profit, independent companies.

Like hospital ERs, the doctor- and investor-owned centers benefit from emergency room cases that could have been treated far more cheaply at a doctor’s office or urgent care facility. Such cases represent 27.1 percent of ER cases, according to a 2010 study by the National Institutes of Health. If those cases were treated at the cheaper clinics, $4.4 billion could be saved annually, the study estimated.

There’s enough profit in the expanding market segment to snare the interest of private equity investors and large hospital groups, which don’t want to lose market share. Baylor Healthcare System and Texas Health Resources have both entered the competition in North Texas. Baylor is partnering with for-profit Emerus Emergency Facilities to set up a handy, downsized hospitals with inpatient beds while and Texas Health Harris Methodist has developed a center with both ER and primary care units.

Although free-standing ERs architecturally resemble “doc in a box” or urgent-care clinics, some Texans are unaware they are entering an ER facility and end up using review sites like Yelp to express regret over charges that can turn out five or 10 times higher.

During a reporter’s visit to the First Choice center in Colleyville, company Vice President Christie Hutchinson said her chain proactively refers patients with minor complaints to nearby urgent-care clinics. This was corroborated by the intake receptionist, who showed the telephone numbers of local clinics she keeps handy.

When First Choice’s parent corporation, Adeptus Health, became a publicly traded stock in June, mandated disclosures offered a glimpse into the industry. Last year, First Choice, the nation’s biggest free-standing ER chain, collected an average $1,500 per patient and treated 77,044, according to the prospectus filed with the Securities and Exchange Commission.

Customer reviews

Daffney Cseke changed her perfect five-star Yelp rating for Elite Care Emergency’s center in Plano when she got a bill in the mail for a whopping $1,800 — and that was after her $100 co-pay.

A respiratory therapist herself, Cseke initially asked if Elite accepted her insurance. She was told it did. But Cseke did not whether Elite was in her insurer’s network of approved providers. Fewer than half of free-standing ERs, for example, have agreements with Blue Cross Blue Shield of Texas, the largest health insurance company in the state and Cseke’s insurer.

Her bill totaled $5,548 for the hourlong treatment of her migraine, which included a CT scan and a pregnancy test even though she had an intrauterine device. After an unexplained $1,200 adjustment, Cseke was stuck with an $1,808 bill.

“I have worked in healthcare for 14 years and I didn’t ask the right question,” said Cseke, who has expressed her anger about her Elite Care experience on Facebook and Yelp. Elite Care said its CEO, Maureen Fuhrmann, would call from Houston to be interviewed by the Star-Telegram last week, but she didn’t call.

Cseke added, “I could have gone to the Medical Center of Plano two miles away and paid just my $100 co-pay.”

Elite Care’s website doesn’t make it any easier for the patient. Its home page and two other pages say, “Acceptance of most medical insurance plans and all major debit and credit cards.” But nowhere does it say that it isn’t part of networks.

The insurance industry hasn’t stood idly by.

Blue Cross has issued literature explaining the differences. “Free-standing ERs often look a lot like urgent care centers, but costs are higher, just as if you go to the ER at a hospital,” the quick reference guide cautions. It also offers a smartphone app for finding the nearest urgent-care clinic and staffs a 24-hour nurse line to rein in higher costs at free-standing ER centers, said Shara McClure, a Blue Cross vice president.

Aetna has gone a step further.

It’s suing two free-standing Houston-area ERs in federal court, saying tie-ups with hospitals were a “sham” to justify charging unwarranted facilities fees, which it says run about $1,500 a patient. Aetna is demanding $5.4 million back.

“Our experience has been that the free-standing ERs were previously urgent care clinics,” Aetna spokeswoman Anjanette Coplin. Whereas clinics could charge only for professional service, once they link to a hospital, they can also bill a facility fee.

“In our lawsuits, we have found that the free-standing ERs don’t really treat emergency,” Coplin said. “In fact for real emergencies they call 911 or get an ambulance for the patient to be transferred to an actual [hospital] ER. The arrangements between the free-standing ER and hospital is usually a sham with the only real interaction between the entities is a split of the facility fee that can now be charged.”

The two firms being sued, operating as Trinity Health Care Network and ER Doc 24/7, have denied any fraud. In their response to Aetna’s complaint, they said that their hospital links are legitimate and that besides, Texas law allows them to collect the fees.

Competing with rivals

In North Texas, two large hospital groups are expanding their own ER concepts to compete with their fast-growing independent rivals.

Baylor seems to be filling in gaps between hospitals with 20,000- and 40,000-square foot ER centers as Wal-Mart has done by slapping down Neighborhood Markets in stretches between Supercenters. What makes Baylor’s concept distinctive are the eight to 10 inpatient beds where patients can stay overnight if necessary, said Steve Newton, Western regional president of Baylor Scott & White Health.

“For the cost of an 80-bed hospital, we can build 10 ER centers,” said Dr. John Wood, regional CEO of Baylor Emergency Medical Centers. This week, a 20,000-square-foot facility will open in Colleyville, a few miles from a First Choice ER. Most of the new Baylor centers are 40,000 square feet, with more office space and a cost of $10 million to build and equip, he said.

As with smaller rivals, Baylor promises an average wait of 15 minutes “door to doctor” and a total stay of one hour.

The group has centers in Keller, Burleson, Mansfield, Rockwall, Murphy and Aubrey. In addition to the new center in Colleyville, three are planned for the region, Newton said.

Is there a risk of oversaturating the market with ERs?

“We haven’t seen that proximity of a free-standing emergency room as a limiting factor yet,” Wood said. “Obviously, more and more are being built and that might be something to consider.”

Both Baylor and Texas Health promote the fact that their units not only are “in-network” with major insurers, but also accept Medicaid and Medicare.

Five years ago, the Texas Health Harris Methodist Outpatient Center Burleson was built as a hybrid facility, combining an ER with an outpatient, primary-care clinic so there’s less risk of a patient being unnecessarily treated by emergency staff, said Aaron Bujnowski, senior vice president of strategy and planning at Texas Health. Pleased with the results, the group is building another in the Parker County community of Willow Park. “And we’re looking at three other sites on the outer ring of the Metroplex,” Bujnowski said.

“We found that consumers are frustrated by two things at free-standing emergency centers,” Bujnowski went on. “The unexpected charge if they assumed they were going into a nonemergency facility. And a second co-pay if they have to transfer to a hospital ER for a very serious condition.”

The Burleson center, he said, can handle sutures, stitches and minor fractures, and can transfer trauma cases to Harris Methodist in Fort Worth with only one co-pay. (First Choice says it has arrangements to send patients directly into non-ER hospital units, avoiding a second co-pay.)

‘Sticker shock’

Critics of the doctor- and investor-owned ER centers recommend greater cost transparency to avoid sticker shock when the bill arrives.

Patients who aren’t experiencing a life-threatening emergency should be told in advance that the facility is an ER, not an urgent-care center, said Stacey Pogue of the Austin-based Center for Public Policy Priorities, a nonprofit that analyzes healthcare and other issues affecting low- and moderate-income Texans.

For many families, the decision to go to a free-standing ER is driven by convenience.

“I see a mom bringing her kids in because she doesn’t want to wait four or five days to see her primary care physician,” First Choice spokeswoman Claire Gibson said.

“If it’s a case of a snotty nose, we will absolutely refer them to an urgent care. But if they say, ‘I’m not feeling well,’ they’ll be treated.”

Gibson and Hutchinson said First Choice is aware of the confusion between ER centers and urgent-care clinics and has become proactive in explaining the difference to the public by staffing booths at school and sports events, taking out TV commercials and speaking to the media.

“We tell them, ‘This is not urgent care,’ ” Gibson said.

First Choice, Texas’ oldest and largest free-standing ER chain, is undeterred by the proliferation of rivals and is looking for underserved areas to open more centers, said Hutchinson, who has an MBA and a nursing background.

As for the increasingly fierce competition, she said: “I like it. It keeps us honest.”

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