“I couldn’t believe it was $2,600 for an earache.”
It may not be surprising that this comment was about a bill from a freestanding emergency room. What may be surprising, however, is that the comment came from John Trabold, the former CEO of Adeptus, one of the freestanding ER companies with a presence in Dallas.
Trabold was speaking at the recent Bisnow Big South Healthcare event in Houston. The deep dive in Adeptus’ stock prices — from $120/share two years ago to $1.76/share today — was “sending ripples through the once-booming industry, worrying both Wall Street and real estate professionals.” Trabold’s comments about his own son’s experience with a freestanding ER highlighted “the industry’s fundamental problem,” the story notes.
When new freestanding ERs began to pop up all over Dallas, we wrote about their proliferation and looked into the reason for their sudden appearance. “This phenomena seems about little else than convenience,” Sam Gillespie wrote.
What may not be convenient is the bill after the ER visit. The difference in billing from a freestanding ER versus an urgent care clinic can be vast, as can the difference between freestanding ERs, which typically are out-of-network for insured patients, and ERs tied to hospitals, which typically are in-network. In fact, one Colorado patient filed a $5 million lawsuit against Adeptus alleging a “widespread and deceptive business practice” that leaves patients with up to $6,000 in unexpected fees each visit.
The clinics say that it is the patient’s, or consumer’s, job to educate himself, but many also say they provide such information at check-in. One freestanding ER operator told Gillespie last year that “we proactively refer patients with minor complaints to nearby urgent care clinics and other options, as appropriate.”
When its stocks began to dive, Adeptus partnered with Texas Health Resources, owner of Presbyterian Hospital, and its freestanding ER on Northwest Highway and Lake Highlands Drive has rebranded accordingly. Partnerships with hospitals “result in more consumers having in-network access to the emergency centers,” writes Sabriya Rice of the Dallas Morning News, who has reported extensively about freestanding ERs.
The Texas Health ER is one of two freestanding ERs in the Lake Highlands area; the other, Preston Hollow Emergency Room, is just outside of our neighborhood at Walnut Hill and Central Expressway. PrimaCare on Royal and Abrams, which opened in 2010 as Doctors Express, is an urgent care clinic. The difference between these two business models, explains the Preston Hollow ER website, is that urgent care centers “are generally not equipped to handle major trauma, injuries, or conditions, … typically do not have imaging or lab capabilities,” and don’t have 24-hour care or board certified ER doctors. All of this translates to the billing differences.
Freestanding ERs concentrated in one area usually is a result of high property values and incomes, as these ERs “tend to burgeon in wealthier communities where patients are privately insured and pay high deductibles” and “avoid areas with high concentrations of low-income patients,” Rice reports.
However, Trabold believes their rapid growth may be coming to a halt. At one time, they needed four patients a day to break even; now they need 12 and are “having trouble collecting their bills,” he said.
“Twenty-five years ago you saw a service station getting put on every corner, then 10 years ago you saw banks, then CVS and Walgreens,” he said at the Bisnow event. “Now you’re seeing urgent care and freestanding emergency departments. The latter you may not be seeing as much in the next years.
“We may have a slowdown in this space going forward. Consumers are getting wiser.”