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On a recent trip to visit family for Thanksgiving, my wife required a visit to the out-of-town Emergency Room to assess her ongoing severe back pain.  We were pleased with the service she received but were reminded of some of my prior observations and opinions as a seasoned health care consultant.  Was this visit really required or necessary?  What alternatives should we have considered?  What value did we receive?  Will our health plan at home recognize the need for this service?

Spending most of my consulting life analyzing health care systems, their costs, their efficiency, and the extent of potentially avoidable care, I had a unique perspective and curiosity I needed to resolve.  New York University is well known for the NYU Emergency Department (ED) Visit Algorithm[1] that categorizes emergency department visits into one of four categories:

  • Nonemergent
  • Emergent, primary care treatable
  • Emergent, ED care needed, but preventable/avoidable
  • Emergent, ED care needed, not preventable/avoidable

The application of this algorithm frequently shows a significant portion of ED visits falls into the first three categories. A recent confidential study completed for a major California health plan showed that about 40% of their reported ED usage was avoidable with care falling into one of the first three categories.

The balance of this article will focus on the sometimes-unsuspected consequences of significant avoidable ED utilization.

Long-standing Beliefs and Opinions

For the past forty-plus years, I have observed significant variation in the rate of emergency room utilization.  For a typical, under-aged working population, emergency room visit utilization rates usually average 145 visits/1,000 persons and are sometimes as high as 160 – 175 visits/1,000.  Best in class utilization for this same population is about 75 – 80 visits/1,000. If the best in class utilization is appropriate, a simple match suggests that avoidable emergency room utilization is at least 40% of typical average utilization.  The above-mentioned study for the major California health plan confirmed this assumption.  A rigorous application of the NYU ED Visit Algorithm on this same health plan showed that 39% of the visits were avoidable (i.e., the first three categories described above).

A rigorous application of the NYU ED Visit Algorithm on this same health plan showed that 39% of the visits were avoidable.

This is consistent with most, if not all, of my observations over my extended career analyzing the health care system.  Review of both Medicaid and Medicare populations show a high percentage of avoidable emergency room visits, in many cases much higher than the 40% observed in the commercial under age 65 population.  In the case of Medicaid where beneficiaries rarely have an established relationship with a primary care provider, the emergency department is oftentimes viewed as the only point of entry into the health care system.  Even with the too-often co-morbidities associated with the older Medicare population, avoidable emergency room admissions oftentimes exceed the 40% observation.

The cost of emergency room care is less than 10% of the total health care cost. However, it is an entrance point for the entire health care system. As much as 15% – 20% of the emergency department visits will be admitted for additional inpatient and critical care. Many of these subsequent stays are much more expensive than a typical hospital stay.  Admissions from the emergency department comprise as much as 40% – 50% of all admissions.  Instead of emergency room care spending 10% of the total health care dollar, a more realistic estimate is that emergency room directed care spans more than 20% – 25% of the total health care system.

Recent Studies

A recent Truven Study[2] showed that 71% of emergency department utilization was avoidable using the NYU ED Visit Algorithm.  United HealthCare recently reported[3] the potential for saving at least $32 billion on avoidable emergency room visits.  This savings references only the cost of the emergency room visit, not other care resulting from that visit.

Needed Action Steps

Now that attention is being focused more directly on hospitals and emergency room care, what action should be taken?  Is it okay to recognize the problem and ignore it?  I think not.  But what should be done?  What action can be taken?

Carriers have tried to limit emergency room care to life and limb-threatening conditions in an attempt to minimize the medically unnecessary care.  However, as pointed out to me recently by an experienced emergency department physician, some of the avoidable care occurring in the emergency department has high value even though it could have been performed elsewhere.  We have to be careful not to overreact but also be intentional to solve the problem.

Some of the best solution steps are:

  • Educate the public (i.e., future patients): help them understand where care should be provided
  • Offer useful alternatives: virtual care with patient advisory services, a form of electronic triage
  • Restructure emergency rooms: Have an “urgent care” side for the visits that should be handled elsewhere and also a “true emergency care” side for those who should be there

Perhaps with a collaboration between payers, providers, and patients we can minimize some of the excess cost of care and help the public realize where they should go.

What’s Next?

Perhaps other collaborations will benefit the public and reduce the cost of care.  This might include

  • Elimination of avoidable inpatient care
  • Elimination of the out-of-network surprise when getting care
  • Revised reimbursement methodologies to avoid incentives for providers to do more than is needed
  • Reduce the unnecessary supply of providers that oftentimes drives up utilization to fill the available slots
  • Eliminate avoidable care in all areas


[1]Billings J., Parikh N., and Mijanovich T.. 2000b. “Emergency Department Use: The New York Story.” Issue Brief Commonwealth Fund. Available at



About the Author

David Axene, FSA, FCA, CERA, MAAA, is the President and Founding Partner of Axene Health Partners, LLC and is based in AHP’s Temecula, CA office.