Is Outpatient Emergency Department Care Profitable? Hourly Contribution Margins by Insurance for Patients Discharged From an Emergency Department

Study objective: We determine the contribution margin per hour (ie, profit) by facility evaluation and management (E&M) billing level and insurance type for patients treated and discharged from an urban, academic emergency department (ED). Methods: Billing and demographic data for patients treated and discharged from an ED with greater than 100,000 annual visits between 2003 and 2009 were collected from hospital databases. The primary outcome was contribution margin per patient per hour. Contribution margin by insurance type (excluding self-pay) was determined at the patient level by subtracting direct clinical costs from contractual revenue. Hospital overhead and physician expenses and revenue were not included. Results: In 523,882 outpatient ED encounters, contribution margin per hour increased with increasingly higher facility billing level for patients with commercial insurance ($70 for E&M level 1 to $177 at E&M level 5) but decreased for patients with Medicare ($44 for E&M level 1 to $29 at E&M level 5) and Medicaid ($73 for E&M level Ito -$16 at E&M level 5). During the study years, cost, charge, revenue, and length of stay increased for each billing level. Conclusion: In our hospital, contribution margin per hour in ED outpatient encounters varied significantly by insurance type and billing level; commercially insured patients were most profitable and Medicaid patients were least profitable. Contribution margin per hour for patients commercially insured increased with higher billing levels. In contrast, for Medicare and Medicaid patients, contribution margin per hour decreased with higher billing levels, indicating that publicly insured ED outpatients with higher acuity (billing level) are less profitable than similar, commercially insured patients.