Some health systems are continuing to implement satellite emergency clinics as health system executives see heightened profit margins. Whether for patients with long drive times in rural communities or set in urban settings for a more convenient and quicker treatment, satellite emergency departments are attractive prospects and as two studies show, a fairly lucrative proposition for a health system looking to develop.

Excessive Hospital ER Costs:

According to a 1994 study by Baker and Baker, and a similar 1994 study by Kelly, the surplus costs associated with non-urgent visits patients make to the ER are two to three times greater than the cost of similar care at clinics and other non-urgent care settings. Specifically for free standing outpatient clinics, costs incurred were $70 per visit compared to $170 for non-urgent care in an emergency room. This statement rings true with what John Cobb, a Healthcare and Technology Adviser at Grubb Ellis, mentioned in a LinkedIn medical real estate group. Mr. Cobb indicated that seeing a patient in the hospital emergency department costs $1500 versus $150 for a free standing emergency department.

Reduced Operating Loss and Increased Revenues

After Deborah Heart and Lung Center (DHLC) opened a satellite emergency department on its campus an immediate positive impact was noticed. The first benefit was a dramatic reduction in operating losses. In 2009 DHLC had a $5.9 million operating loss, but after a year with the satellite emergency department, the loss dropped to $1.3 million. That is a transition from a negative 4.6% operating margin to a negative .9% operating margin.

Likewise, DHLC has welcomed an additional 90 admissions per month from the satellite emergency clinic, an increase of 14.3% from 2009 to 2010. With increased admissions, increased revenues followed, and revenues for DHLC rose by 9.2% in 2010.

Integrating a satellite emergency department is not a one size fits all solution, but it is a growing approach for health systems in need.

James Ellis, CEO, Health Care Realty Development Company, is a nationally recognized successful real estate investor and developer of medical office properties with a comprehensive knowledge of sophisticated real estate transactions, cost effective designs, and efficient property management.

Aaron Razavi is Associate Marketing Director at Health Care Realty Development.

Visit their blog at http://www.hcrealty.com/medicalrealestatedevelopment/