HOUSTON — Not far from neighborhood streets lined with million-dollar homes here lies an open-air mall where people go to eat, shop and — when needed — get emergency medical treatment. People pull up to the front door, park next to a gleaming antique ambulance and enter a waiting room that feels more like a graceful hotel lobby than a holding area for sick people.
It isn’t a clinic or an urgent care — it’s an emergency room, without the hospital.
When lawyer Richard Yount opened the facility, called Elite Care Emergency Center, in 2009, the idea was simple: Emergency rooms were crowded, with miserable waits and rushed doctors. He could fix that — and make a lot of money — by carving the department out of the hospital, putting it in a neighborhood where people without insurance were unlikely to show up and charging hospital-level prices.
There was just one problem: People assumed it would be cheap, especially at first. “No matter how many times you tell people you’re an emergency room, they have a tendency to think: If you’re in that kind of an environment, you’re an urgent care,” said Yount, who now operates four free-standing ERs.
Free-standing ERs, stand-alone facilities where people can receive acute care any time of day, have increased in Texas in recent years as a result of a 2009 law that permitted the establishment of emergency rooms independent of hospitals. They join a host of other on-demand facilities — including hospital ERs, hospital-owned satellite ERs, “microhospitals” and urgent-care facilities — where people can receive care, especially if they have robust health insurance.
Texas’s wild west of competition, with lit-up signs advertising “SHORT WAIT TIME FOR LACERATIONS” and highways punctuated by warring billboards, is a leading example of how an emerging wave of convenient medical-care options for Americans can also create confusion and lead people to seek expensive treatment for conditions that might not merit it, pushing up costs across the health-care system.
Across 32 states, more than 400 free-standing ERs provide quick and easy access to care. But they also are prompting complaints from a growing number of people who feel burned by hospital-size bills, like $6,856 for a cut that didn’t require a stitch or $4,025 for an antibiotic for a sinus infection.
Emergency care requires costly imaging and laboratory equipment and facilities that are open 24 hours a day and staffed round the clock by a physician — and the costs reflect that. Prices for an average free-standing ER visit have grown and are now similar to hospital ERs, but patients with the same diagnosis rack up bills 10 times higher than at an urgent care, according to an analysis of one insurer’s Texas data by Rice University economist Vivian Ho. She found use of the facilities in Texas more than tripled between 2012 and 2015.
The high cost raises the question of whether people are seeking out more expensive care only because it’s convenient, not because it’s necessary.
“If there had not been a close, convenient emergency department, would that person have gone to an emergency department, or sought care somewhere else?” said Jeremiah Schuur, an emergency medicine physician at Boston’s Brigham and Women’s Hospital who studies the industry.
Texas’s flowering of free-standing ERs leads a debate about whether convenience makes people healthier or needlessly drives costs up — a central dilemma in health-care innovation. Health-care specialists want people to seek care that’s necessary. But with U.S. health-care spending surpassing $3 trillion this year, new attention is focused on how making health care a better consumer product might simply increase its use. Research shows, for example, that walk-in retail health clinics and telephone medicine, which might seem to replace more expensive options, actually tend to slightly drive up health-care spending.
“The vast majority of people who get sick on a monthly basis don’t go get care, don’t even think about getting care — and among those who do think, ‘I should go get care,’ only two-thirds of them end up getting a visit of some type,” said Ateev Mehrotra, a physician and researcher at Harvard Medical School who did that research. “There is an enormous market of people out there who . . . choose to get care when it’s convenient.”
Texas’s crowded landscape of ERs and clinics may seem like a consumer paradise, in which people are able to shop around. But it lays bare a simple truth: It’s hard to shop when no one knows what anything costs.
Bryan Piccola of Frisco, Tex., sliced his left pointer finger on July 4 when his knife slipped cutting tightly wound zip ties off a toy for his year-old daughter. He debated cleaning the wound up and sticking a bandage on it, but he went to a free-standing First Choice Emergency Room a few miles from his house. He asked beforehand how much it would cost, since he is a veteran and didn’t have separate insurance, and says he was assured it wouldn’t be too bad. He received five stitches and, later on, the bill: more than $5,000. The company discounted it to $2,888.
“You drive by them all the time. There’s a bunch of these little pop-up clinics,” Piccola said. “If they would have told me [how much it would cost], I wouldn’t have gone — I’d have gone home and wrapped it up and waited for the scar.”
Adeptus Health, the company that owns First Choice Emergency Room, declared bankruptcy in April. It declined a request for an interview.
Richard Yount embarked on his career as an emergency room entrepreneur as Texas’s access to emergency care was hitting rock bottom, given a failing grade by the American College of Emergency Physicians. He had watched other hospital services, such as imaging centers, being spun into separate, lucrative businesses.
“You had not a lot of competitors and you had all the patients you’d ever want, and they paid a lot. Money just fell in your lap,” Yount said. “I watched this train go by for 30 different services, and I only caught onto the caboose.”
Yount’s insight was simple: In addition to the physician’s bill, hospitals were paid a “facility fee” to cover X-rays, CT scanners, laboratories, and round-the-clock staffing by physicians and nurses. Free-standing emergency rooms shared many of these costs, since they strive to deliver the same care available in a hospital ER, and the facility fee made the business viable.
By situating in well-off neighborhoods, they could largely avoid patients who couldn’t pay. Without a hospital affiliation, they cannot bill Medicare or Medicaid for emergency care, and many carry warnings on the front door that they do not accept those less-lucrative plans. And as a start-up, the free-standing ERs weren’t encumbered with the high administrative costs of a hospital.
Complicated cases, such as surgeries or trauma, could be sent by ambulance to a hospital, but stand-alone emergency room operators argue they can see people faster, keep them out of the hospital altogether and save money.
Yount, 68, is a jumble of contradictions. He is an unapologetic capitalist who operates four free-standing emergency rooms in Texas and is in the process of finding a site in Las Vegas to build a “microhospital” — an ER with some inpatient beds.
He is also a supporter of Sen. Bernie Sanders of Vermont and a strong believer in universal health care whose office is still decorated with light-blue signs from Sanders’s presidential campaign.
“I can believe in one thing on a macro level, as to what this country needs to do. But if I want to operate, I’m operating within the current system that we have. So I make the economic decisions based on the current system we have,” Yount said. “Doesn’t mean I have to like the current system — and I don’t.”
Yount says the start-up costs are about $5 million. In the early days, the business could break even with just seven or eight patients a day. The break-even point today is up to eight or nine, and Yount expects the number to rise as pressure from insurers increase.
The model appeals to many physicians and nurses.
“The mind-set is totally different here,” said Aaron Schwartz, an emergency physician at Elite Care. “In the hospital, it’s driven by surveys and scores, efficiency and throughput times and volume. . . . We can spend as long as the patients want us to spend with them.”
Some patients appreciate the convenience. Miguel Balli, 24, of Houston had spent a miserable night, vomiting and ill, when he showed up at Elite Care one Monday morning. Within an hour, he was getting an IV drip and beginning to feel better.
“These setups are a lot more beneficial for the patient as far as time concern and quickness and availability,” Balli said. “If you’re not the most serious person at the ER, if you’re not the one bleeding out or having a heart attack, you’re probably going to get last on the totem pole.”
The problem is the flip side of the success: People who would have thought twice before navigating down to Houston’s crowded medical hub, the world’s largest medical center, have a surfeit of options right in the neighborhood.
In Sugar Land, an affluent suburban city south of Houston, there is St. Michael’s Emergency Center, right next to Emerus 24HR Emergency Hospital, a former free-standing ER that’s been converted into a small hospital. In the driveway, two identical signs look like mirror images, each directing people with an “EMERGENCY” in a different direction. A mile away, in both directions, are two hospitals.
The ease of access is a good thing if it is moving people to seek care for symptoms that would be dangerous to ignore.
Many free-standing emergency room operators say they do their utmost to stress to people that they are in an emergency room, with emergency room prices, and they refer patients with minor conditions to urgent-care facilities. The buildings have “emergency” signs on them and are required by state law to carry written warnings that they will charge a facility fee — although the amount is not disclosed.
But Ho of Rice University has found a big overlap in the types of conditions for which people seek care: Three-quarters of the 20 most common diagnoses at free-standing ERs were the same as at urgent-care centers. A slightly smaller overlap existed for hospital-based emergency rooms.
“It’s fine if it generates the value of the price that is paid, but if it’s not generating that value, then all it does is raise costs for everybody,” Ho said. “There needs to be more transparency in terms of the cost. Why should it be comparable to what a hospital ER is charging?”
But even as free-standing emergency rooms defend themselves, the model appears to be evolving, in part in response to the confusion. Yount provided a tour of what he says is the future: a large free-standing ER that stands apart from shopping malls and wouldn’t easily be mistaken for an urgent-care clinic. One of his competitors, Emerus, switched to building “microhospitals.”
Free-standing ERs blame insurers for big bills, arguing they deny claims or underpay them. Insurers, in turn, blame the facilities for charging high prices.
“There’s this misleading factor, or I’d go so far as to say deception,” said Shara McClure, a vice president at Blue Cross Blue Shield of Texas. “A member who’s having an incident, having an acute condition, they go into these free-standing ERs thinking they’re a cost-effective solution.”
The Texas legislature is considering bills that would help protect consumers from surprise bills and regulate the industry.
That points to the biggest lesson emerging from Texas’s experiment.
“We need to do more to make prices extremely visible to patients,” said Schuur, of Brigham and Women’s Hospital. “But it also calls into question the ability of patients to be smart consumers, particularly in the time when they have what they perceive as an acute health-care need.”