state regulation of freestanding emergency departments varies widely… · 2016-12-08 · by...

At the Intersection of Health, Health Care and Policy

doi: 10.1377/hlthaff.2016.041235, no.10 (2016):1857-1866Health Affairs

Affecting Location, Growth, And Services ProvidedState Regulation Of Freestanding Emergency Departments Varies Widely,

D. SchuurCatherine Gutierrez, Rachel A. Lindor, Olesya Baker, David Cutler and Jeremiah

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By Catherine Gutierrez, Rachel A. Lindor, Olesya Baker, David Cutler, and Jeremiah D. Schuur

State Regulation Of FreestandingEmergency Departments VariesWidely, Affecting Location,Growth, And Services Provided

ABSTRACT Freestanding emergency departments (EDs), which offeremergency medical care at sites separate from hospitals, are a rapidlygrowing alternative to traditional hospital-based EDs. We evaluated stateregulations of freestanding EDs and describe their effect on the EDs’location, staffing, and services. As of December 2015, thirty-two statescollectively had 400 freestanding EDs. Twenty-one states had regulationsthat allowed freestanding EDs, and twenty-nine states did not haveregulations that applied specifically to such EDs (one state had hospitalregulations that precluded them). State policies regarding freestandingEDs varied widely, with no standard requirements for location, staffingpatterns, or clinical capabilities. States requiring freestanding EDs tohave a certificate of need had fewer of such EDs per capita than stateswithout such a requirement. For patients to better understand thecapabilities and costs of freestanding EDs and to be able to choose themost appropriate site of emergency care, consistent state regulation offreestanding EDs is needed.

Emergency departments (EDs) play acritical role in the US health caresystem, handling one-fourth of allacute care visits and half of all hos-pital admissions.1 The Emergency

Medical Treatment and Labor Act (EMTALA)of 1986 recognizes EDs as an important partof the social safety net that provides acute medi-cal care to all patients, regardless of their demo-graphic characteristics or ability to pay.2

Most EDs are located within hospitals, butthere has been a rapid growth in the numberof freestanding EDs in recent years. The conceptof a freestanding EDwas introduced in the 1970sas a way to provide emergency care in rural areaswhose residents lacked access to an acute carehospital.The two main types of freestanding EDs—hos-

pital-affiliated and independent—differ in size,reimbursement options, and types of servicesprovided. Hospital-affiliated freestanding EDs

are owned by or affiliated directly with hospitals,which allows for the integration of care betweenthe two facilities; if these freestanding EDs billunder the same National Provider Identifier asthe affiliated hospital, they fall under the sameCenters for Medicare and Medicaid Services(CMS) rules and regulations as the ED of thathospital. In contrast, independent freestandingEDs have owners that range from a single physi-cian to a group of outside investors, such asprivate equity firms; tend to be limited in theirsize and the services they offer, compared tohospital-affiliated freestanding EDs; and arenot recognized by CMS as EDs.Thus, providers at hospital-affiliated free-

standingEDs that bill with the hospital’s Nation-al Provider Identifier can bill Medicare for ser-vices with emergency medicine codes and bereimbursed for separate facility fees, while pro-viders at independent freestanding EDs can billMedicare only for a general office visit—which

doi: 10.1377/hlthaff.2016.0412HEALTH AFFAIRS 35,NO. 10 (2016): 1857–1866©2016 Project HOPE—The People-to-People HealthFoundation, Inc.

Catherine Gutierrez is amedical student at HarvardMedical School, in Boston,Massachusetts.

Rachel A. Lindor is a residentphysician in emergencymedicine at the Mayo ClinicCollege of Medicine, inRochester, Minnesota.

Olesya Baker is a statisticianin the Department ofEmergency Medicine atBrigham and Women’sHospital, in Boston.

David Cutler is the OttoEckstein Professor of AppliedEconomics at HarvardUniversity, in Cambridge,Massachusetts.

Jeremiah D. Schuur ([email protected]) is chief ofthe Division of Health PolicyResearch in the Departmentof Emergency Medicine atBrigham and Women’sHospital and an assistantprofessor of emergencymedicine at Harvard MedicalSchool.

October 2016 35: 10 Health Affairs 1857

Freestanding Emergency Departments

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leaves the patient with a facility fee that is notcovered by Medicare. The distinction betweenthe two types is becoming blurred as smallerindependent freestanding EDs affiliate with hos-pitals, and hospitals open freestanding EDs thatlook like independent EDs.The number of freestanding EDs grew from 55

in 1978 to 222 in 2008.3,4 That growth has beenparticularly rapid in several states—mostnotablyTexas, where more than 190 freestanding EDshave opened since 2010.5

The rapid growth of freestanding EDs has ledto a debate about their role in the health caresystem. Proponents of these EDs cite their po-tential to provide high-quality emergency care topeople in medically underserved areas, relievethe burden on overwhelmed hospital EDs, andprovide convenient services with shorter waitsfor treatment.6 Others have voiced concern thatfreestanding EDs encourage increased use ofemergency services for nonemergency com-plaints, increase the cost of the health caresystem, and compete with hospitals for EDservices—which ultimately threatens access toservices that are mainly provided by only hospi-tal EDs, such as trauma care.3

The general public has certain expectationsabout the type of medical care that is availableat EDs, such as care for trauma, heart attacks,and strokes. However, freestanding EDs mightnot always provide these services (for example,they might not accept ambulances, and most donot provide trauma services). Complicating thisdebate are the variations across states in thenumber and location of freestanding EDs andthe regulations concerning them3—variationsthat persist although the American College ofEmergency Physicians has recommended corepolicies that freestanding EDs should adopt.7

Given the rapid growth of freestanding EDs inthe United States, it is important to understandhow state policies affect these EDs’ growth, loca-tion, and operation.We performed a policy anal-ysis of state laws and regulations affecting free-standing EDs to characterize the services theyare required to offer and their operating, equip-ment, and staffing requirements. We calculatedthe proportion of state policies that are alignedwith the recommendations of the American Col-lege of Emergency Physicians.7 FreestandingEDs may be required to have a state certificateof need. Therefore, we also analyzed whetherthat requirement was related to the number offreestanding EDs in a state.

Study Data And MethodsInventory Of Facilities And State Regula-tions We gathered lists of licensed freestanding

EDs from state departments of health and otherstate agencies, and we conducted Internetsearches for each state using keywords such asfreestanding, satellite, emergency department, andED. The inventory of facilities analyzed in thisarticle was current as of December 2015. As acomparison,we also used thenumber of hospitalEDs listed in the American Hospital AssociationAnnual Survey Database for 2013, the most re-cent year available at the time of our analysis.State policies and regulations for freestanding

EDswere identified from three sources. First, wecontacted state departments of health to deter-minewhether freestanding EDswere required tobe licensed and requested the applicable regula-tions. Second, we searched the departments’websites for individual state regulations for free-standing EDs, using keywords such as freestand-ing emergency department, satellite emergency de-partment, off-campus emergency department, andemergency facility. Third, we searched Westlaw-Next, an online legal research service, to accessstate policies not available on the departments’websites and identify regulations that had beenamended or repealed in recent years. The West-lawNext search was conducted with the assis-tance of a lawyer and a legal librarian.We reviewed statutes and regulations to iden-

tify specific features that affected licensing, op-erating, and staffing requirements. Licensingrequirements included license fees, populationand distance requirements (described below),and ownership restrictions. Operating require-ments included regulations that mirror federalEMTALA requirements for medical screeningand stabilization, transfer and transport agree-ments with other hospitals and emergency med-ical services, and required medical equipment.Staffing requirements pertained to numbers andhours of staffing by providers and support staff,nurse-to-patient ratios, and certifications andtraining experience (for example, advanced car-diac life support or pediatric advanced life sup-port).8,9 We excluded regulatory requirementsthat did not directly affect the provision ofemergency medical care, such as those relatedto administrative tasks (for example, medicalrecord maintenance) and nonclinical operatingtasks (for example, laundry services and wastedisposal).Data Analysis We developed a standardized

data collection sheet with input from experts inemergency care, health economics, and healthpolicy. The sheet was pilot-tested by two trainedreviewers and iteratively revised. All state regu-lations were reviewed by one of the authors, anda subset of five state policieswas also reviewedbya lawyer, with disagreements between the twoarbitrated by a senior reviewer.


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We calculated the proportion of states withfreestanding ED regulations that contained spe-cific licensing, operating, and staffing require-ments. We also calculated the proportion ofstates with at least one freestanding ED thathad certain regulations specific to freestandingEDs.We calculated the proportion of state regu-lations that were in alignment with the recom-mendations of the American College of Emer-gency Physicians.7 We specifically analyzed therelationship between certificate-of-need require-ments for freestanding EDs and the number offreestanding EDs across states.We calculated the population-adjusted num-

ber of freestanding EDs in each state by dividingthe state-level totals of such EDs by the nationalpopulation estimates for the state based on 2014census population estimates.10 We then com-pared the population-adjusted number of free-standing EDs in states with andwithout a certifi-cate-of-need requirement, using a t-test on theequality of means.

Limitations This study had several limita-tions. First, some state policies were not accessi-ble throughWestlawNext or statedepartments ofhealth. We consulted with a legal librarian toidentify repealed regulations and contacted thedepartments of health by telephone to gatheradditional information.Second, the dynamic nature of laws and the

market are such that regulations specific to free-standing EDs and the number of such EDs ineach state are constantly changing. To minimizethe effect of these changes on our results, wecontinuously updated our national inventoryto reflect market and regulatory changes, withthe most recent update occurring in De-cember 2015.Finally, this study accounted for freestanding

ED services required by state regulations, butsome freestanding EDs might have providedmore services, staff members, and technologythan their states required. Further research,such as a survey of current services and equip-ment offered at freestanding EDs, would help

determine the correlation between minimumstate requirements and actual services offered.

Study ResultsFreestanding Emergency Department Inven-toryWe found that there were 400 freestandingEDs in the United States as of December 2015,compared with 4,147 hospital EDs as of 2013(Exhibit 1). Texas and Ohio had the greatestnumbers of freestanding EDs.Twenty-one states had policies specific to free-

standing EDs that were either incorporated intothe state’s hospital regulations or stated inde-pendently (for a list of these states, see onlineAppendix Exhibit A1).11 Twenty-nine states hadno regulations specific to freestanding EDs, buttwo states, NewYork andWashington, regulatedthemcaseby case.One state, California, indirect-ly barred freestanding EDs by statute in its hos-pital regulations.Of the thirty-two states that had freestanding

EDs, seventeen had specific policy requirementsfor them (Appendix Exhibit A1).11 Twenty-threestates had hospitals that operated affiliated off-campus EDs, and eleven of these states had poli-cies specific to freestanding EDs that requiredhospital affiliation. Nine of the thirty-two stateswith freestanding EDs allowed them to operateindependently of accredited hospitals—as indi-cated by policies specific to freestanding EDs orcase-by-case regulation, or by the absence of anypolicies for freestanding EDs. Four states hadregulations for freestanding EDs but did notyet have any freestanding EDs.State Requirements For Freestanding

Emergency Departments Twenty-four statesrequired a certificate of need before a freestand-ing ED could be opened, and twenty-one statesrequired state licensure (Appendix Exhibit A1).11

Of the thirty-two states with freestanding EDs,those with certificate-of-need requirements hadsignificantly fewer of the EDs per capita, com-pared to states without such a requirement (0.57versus 1.52 per million people; p ¼ 0:03). A sig-nificant difference remained even when we ex-cluded Texas from the analysis.Twenty-two (69 percent) of the thirty-two

states with freestanding EDs required them tobe integrated into local emergency medical ser-vices by having transport agreements with bothambulances and hospitals (twenty-three statesrequire agreements with EMS, and twenty-fiverequire agreements with outside hospitals;Exhibit 2). Exhibit 2 shows the number of statesthat have policies that were in concordance withthe seven American College of Emergency Physi-cians recommendations for freestanding EDs(Note c); only two (6 percent; data not shown)

The rapid growth offreestanding EDs hasled to a debate abouttheir role in thehealth care system.


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of the thirty-two states had policies that were inconcordance with all seven.7 Thirteen (41 per-cent) of the states had some type of licensingrequirements. The median licensing fee was$2,250, with a range of $50–$14,820 (data notshown).▸ GEOGRAPHIC RESTRICTIONS: Among all

states, fourteen (28 percent) had regulationsthat included requirements for either maximumlocal population or distance from the nearesthospital, and one state (Illinois) had require-ments for both. All fourteen states specified thatfreestanding EDs be located at least a minimumdistance from a hospital—determined by moststates in terms of miles, but by some states interms of presence inside or outside of city orcounty limits. For example,Mississippi requiredfreestandingEDs tobe at least tenmiles fromanylicensed hospital, while Oregon prohibited theopening of a freestanding ED in a county withthreeormorehospitals that hadanEDor in a citywith a hospital that had an ED.▸ SERVICES PROVIDED: EMTALA requires hos-

pital-based EDs to screen all patients for emer-gency medical conditions, stabilize them, andeither provide definitive emergencymedical care

or transfer them to another facility that is able toprovide such care. EMTALA’s provisions applyonly to hospitals that have entered into agree-ments with CMS, not to independent free-standing EDs. Of the thirty-two states with free-standing EDs, twenty-two (69 percent) hadrequirements for those EDs regarding emergen-cy screening, stabilization, and transfers thatmirrored those stipulated by EMTALA; nine(28percent) of those states hadno requirementsfor provision of these services at a freestandingED (Exhibit 2).Many states had regulations requiring that

freestanding EDs provide specific medical ser-vices; products; and technology such as equip-ment for monitoring, imaging, and treatment.For example, twelve of the thirty-two states withfreestanding EDs required pediatric equipmentto be available on site (Exhibit 2). Thirteen statesrequired that the site have a cardiac defibrillator,a device proven to improve survival in cardiacarrest.12 Nine states required that blood productsfor transfusion be available on site.▸ STAFFING AND OPERATIONS: Among the

thirty-two states with freestanding EDs, physi-cianswere required tobeon site at a freestanding

Exhibit 1

Freestanding and hospital emergency departments in the United States

SOURCE Authors’ analysis of data on freestanding EDs gathered as of December 2015; and American Hospital Association AnnualSurvey Database, 2013.


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ED during all of its hours of operation in fifteen(47 percent) states, and eleven (34 percent) ofthe states required on-site physicians to be boardcertified or eligible for certification in emergen-cy medicine (Exhibit 2).13 Nurses were requiredto be on site during all hours of operation intwenty-three (72 percent) of the states.

Regulations In Three Selected States We

analyzed the requirements for freestanding EDsin three states that represent the range of staterequirements regarding licensing, screeningand stabilization, staffing, and medical equip-ment.Texas, the statewith themost freestandingEDs, had no certificate-of-need requirement orlocation restrictions, permitted both indepen-dent and hospital-affiliated EDs, and had very

Exhibit 2

State policies for licensing, operating, and staffing freestanding emergency departments (EDs) and requirements forservices, 2015

Among 32 states with freestanding EDs:

Policy or regulation

Percent of stateswith policy orregulation(variable)

Number of stateswith policy orregulation(outcome)

Licensing requirements

State-issued license 41 13Population requirementsa 3 1Distance from hospital or EDb 28 9

Operating requirements

Open 24/7c 69 22Written transfer agreement with outside hospitalc 78 25EMS transport agreement 72 23Ambulance or helipad on site 9 3Quality improvement programc 78 25

EMTALA-like requirementsc

Screening 69 22Stabilization 69 22Transfer 72 23

Services or products required on site

Cardiac defibrillator 41 13End tidal carbon dioxidemonitord 13 4X-ray 47 15Ultrasound 13 4Computed tomography 13 4Blood transfusion products 28 9Laboratory 44 14Mechanical ventilation 19 6Emergency obstetrics kit 22 7Pediatric equipment 38 12

On-site staffing requirements

PhysicianAvailable during all hours of operatione 47 15Board certified or eligible for certification in

emergency medicinec 34 11NurseAvailable during all hours of operationc 72 23Certified in ACLSc 28 9Certified in PALSc 19 6

SOURCE Authors’ analysis of state regulations. NOTES EMS is emergency medical services. EMTALA is Emergency Medical Treatmentand Labor Act of 1986. ACLS is advanced cardiac life support. PALS is pediatric advanced life support. aIllinois requires freestandingEDs to be located in counties with more than 50,000 residents; Georgia requires each county to have no more than one freestanding EDper 35,000 residents. bSome states have specific requirements, others only vague ones. Most require a freestanding ED to be within30–50 miles of a hospital. Nevada requires freestanding EDs to be located more than thirty miles by ground transportation from thenearest emergency department. Other states with distance limits (including three states that do not have freestanding EDs) are AL,GA, ID, IL, LA, MA, MO, NV, NC, ND, OK, and VA. cRecommended policies for freestanding EDs by the American College of EmergencyPhysicians (see Note 7 in text). EMTALA-like requirements, including screening, stabilization, and transfer, are included as one of theseven recommended policies. dA device used to monitor ventilation during sedation and airway management. eSome states, such asNew Hampshire, require physicians to be available within a five-minute driving distance instead of being on site.

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specific staffing and equipment requirements(Exhibit 3). In contrast, Alabama, which hadonly one freestanding ED and strict require-ments regarding the location of such EDs, re-quired them to be affiliated with a hospital,but it had few requirements for their staffingand equipment. California required that EDsbe part of a hospital and have immediate accessto surgical services for life-threatening condi-tions, effectively banning freestanding EDs.More details on requirements in these and se-lected other states are available in Appendix Ex-hibit A2.11

Projections For Growth We next projectedthe number of freestanding EDs that may opennationwide in the future, based on the EDs’ cur-rent density in states with and without certifi-cate-of-need requirements. Texas had 7.2 free-standing EDs per million people (data notshown). Projecting that in the future states with-out those requirements will have the same aver-agedensityof freestandingEDsasTexasdoes,weestimated that there may be as many as 1,166freestandingEDsnationally. Theaveragedensityof freestandingEDs in the twenty-four states thatrequired a certificate of need was 0.59 ED peronemillionpeople. Projecting that all stateswiththat requirementwill have the same average den-

sity of freestanding EDs, we estimated that 69freestanding EDs will open in these states overthe next seven years, for a nationwide total of1,235 freestanding EDs.If there were a relaxation of certificate-of-need

requirements and all states had the same densityof freestanding EDs as Texas, we estimated thatthere could be asmany as 2,011 freestandingEDsin the future. This analysis excluded California(where freestanding EDs are essentially bannedby state policy) and the District of Columbia. Italso did not account for variables other thancertificate-of-need requirements, such as politi-cal or cultural influences and competition be-tween freestanding EDs and nearby hospitals.

DiscussionRole Of Freestanding Emergency Depart-ments In The Health Care Market The rapidgrowth in the number of freestanding EDs ischanging the delivery of acute medical care inmany states. Sources of acute care services nowinclude physician offices, retail clinics, urgentcare centers, freestanding EDs, and hospitalEDs. None of these settings is strictly definedin terms of the services offered.However, urgent care centers provide care for

Exhibit 3

Variations across three states in policies affecting freestanding emergency departments (EDs), 2015

State (number of freestanding EDs)

Alabama (1) California (0) Texas (187)Licensing

License required with annual renewal; CONrequired. ED must be a satellite of a hospitaland located within 35 miles of a hospital.

License from the state Department of HealthCare Services required for all health carefacilities. Special permit from the departmentrequired for any licensee offering basicemergency services. EDs are regulatedthrough hospital regulations only.

License required; CON not required. Additionalrequirements apply.

Screening and stabilization

Screening required of all patients for anemergency medical condition, andstabilization or transfer required if the EDdoes not have the capability to treat such acondition.

No mention of screening or stabilizationrequirements; no reference to EMTALA in thehospital regulations.

Screening required of all patients for anemergency medical condition, andstabilization or transfer required if the EDdoes not have the capability to treat such acondition.

Staffing

A physician who is board certified or eligible tobe certified in emergency medicine is requiredto be on site during all hours of operation.

A physician who is board certified or eligible tobe certified in emergency medicine is requiredto be on site during all hours of operation.

A physician and a nurse with PALS and ACLScertification must be on site 24/7.

Medical equipment

Radiology and laboratory services are requiredon site during hours of operation. A helipad isrequired on site.

Monitoring equipment and laboratory servicesare required on site 24/7. Surgical servicesare required to be available immediately forlife-threatening situations.

Monitoring equipment is required on site.Radiology services are required 24/7. Bothadult and pediatric equipment are specificallyrequired.

SOURCE Authors’ analysis of state regulations. NOTES CON is certificate of need. EMTALA is Emergency Medical Treatment and Labor Act of 1986. PALS is pediatricadvanced life support. ACLS is advanced cardiac life support.


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a broader range of acute complaints than mostphysician offices do; are usually staffed by li-censed independent providers (physicians, phy-sician assistants, or advanced practice registerednurses), though the providers often lack specifictraining in emergency medicine; and generallyoffer only limited laboratory testing and plain(that is, two-dimensional) x-ray services.14 Free-standing EDs occupy the space in the marketbetween urgent care centers and traditional hos-pital EDs, providing care for a wide range ofacute complaints, being staffed by physicianswho often have training in emergencymedicine,and providing access to advanced diagnostictesting such as computerized tomography (CT)scans—but not providing the full services of ahospital ED; most do not receive ambulances,do not provide trauma services or specialist con-sultations, and do not have an operating roomon site.3 These characteristics lead to differencesin the patient populations receiving care at hos-pital EDs versus freestanding EDs and to differ-ences in the cost of care at the two types of EDs.Patients treated in freestanding EDs are less se-verely ill than those treated in hospital EDs, andthe cost ofprovidingcare is lower in freestandingEDs than in hospital EDs.Our study demonstrated that state require-

ments for freestanding EDs range from thor-ough and well-defined to vague or nonexistent,a range that likely contributes to the wide varia-tion in the services available at freestandingEDs.Patients may assume that freestanding EDs

provide the same services as hospital-basedEDs and seek care from a freestanding ED thatis not capable of providing them with definitivecare—which results in treatment delays thatcould adversely affect patient outcomes. For ex-ample, we found that only twelve of the thirty-two states with freestanding EDs required themto have pediatric equipment available. Previous

research has shown that pediatric equipmentand training are needed to provide high-qualitycare for pediatric emergencies.15 Parents withsick children often drive them to the nearestED,16 which could be a freestanding ED that isnot appropriately equipped to provide high-quality pediatric emergency care.Conversely, patients may assume that free-

standing EDs are comparable to urgent care cen-ters or retail clinics and use the EDs for low-acuity complaints, without realizing that theED facility fee will result in significantly highertotal charges for similar services. Newspaper ar-ticles17 and reviews on consumer rating web-sites18 have reported examples of this “stickershock” for freestanding ED services. For exam-ple, a patient in Colorado received a bill for$5,000 for a visit to a freestanding ED at whichher two daughters were treated for flu-like symp-toms.17 Similarly, insurers are reporting highbills for freestanding ED visits for low-acuitycomplaints such as sore throat and earache.19

Inappropriate Regulations While a lack ofwell-defined regulations for freestanding EDscould lead to the problems outlined above, reg-ulations that are overly detailed can also be prob-lematic. For example, state requirements thatfreestanding EDs provide services or equipmentthat have not been shown to be critical for high-quality emergency care may increase spendingon services that may not be evidence-based, in-creasing the overall cost of care. Our review ofstate policies identified several examples of this.Fewer than 2 percent of patients seen at free-standing EDs require transport, and a stillsmaller share require helicopter transport.20

However, two states required freestanding EDsto have a helipad, although the helicopter is anexpensivemethod of transportation that has notbeen shown to be cost-effective.21

Other state regulations include requirementswhose merits are unproven or that are outdated.For example, Mississippi requires freestandingEDs to have supplies for peritoneal lavage, adiagnostic procedure that was abandoned morethan ten years ago as the quality of diagnosticimaging improved; and that freestanding EDscarry pneumatic antishock garments, devicesfor treating shock that are no longer used be-cause of their negative side effects.22,23

Policy makers should regularly review the ser-vices that freestanding EDs are required to pro-vide, as medical practice is dynamic. Freestand-ing EDs should provide services that reflect thecurrent evidence-based standard of care.Impact Of Certificate-Of-Need Require-

ments Access to emergency care varies acrossthe United States and within states, with ruralareas less likely than urban areas to have EDs,

Policy makers shouldregularly review theservices thatfreestanding EDs arerequired to provide, asmedical practice isdynamic.


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and urban EDs more likely than rural EDs to bechronically overcrowded and have prolongedwaiting times.24 Freestanding EDs have the po-tential to improve access to emergency care inareas with few other acute care services. Howev-er, they can also be duplicative of existing ser-vices and increase costs. Certificate-of-need reg-ulations aim to restrain health care costs andrestrict development of health care facilities toareas where there is proven need.25

We found that states with certificate-of-needrequirements had fewer freestanding EDs percapita than states without such requirements,which indicates that these policies are likely bar-riers to freestanding ED growth. Previous stud-ies of the effects of these requirements have re-ported varied results: Some have found that therequirements are associated with more efficientuse of hospitals, while others have found thatthey inhibit competition and can lead to “eco-nomic rents” by existing facilities—that is, pay-ments in excess of expected costs because ofscarcity or limited availability.26

Certificate-of-need requirements have the po-tential to be beneficial by limiting growth offreestanding EDs in locations with adequateemergency services and by holding down healthcare costs. However, they also have the potentialto inhibit the growth of freestanding EDs inareas with inadequate emergency care, wherethe EDs could improve health care quality.Regulatory Variability And Growth From

a public health perspective, freestanding EDshave the potential to reshape the safety net thatcurrently guarantees all patients access to emer-gency care.2 But—in contrast to hospital-basedEDs and those billing with a hospital NationalProvider Identifier—independent freestandingEDs are not bound by the provisions of EMTALAand have no federal obligation to provide emer-gency care to all patients.Without state-specificregulations addressing this obligation or requir-ing EMTALA-like protections, the growth of in-dependent freestanding EDs has the potential tocreate a parallel system of emergency care inwhich people can be turned away based on theirinsurance status, age, immigration status, orother factors.Currently, eighteen of the twenty-one states

with regulations for freestanding EDs requirethem to abide by regulations that mirror thoseof EMTALA or have similar principles. However,Arizona, Minnesota, and Delaware—with a col-lective total of ten freestanding EDs—do not.Additionally, hospitals and other providers un-derstand that the government is enforcing theprovisions of EMTALA, and that violations carrysevere and costly penalties.2 In contrast, it isnot clear whether state regulations similar to

EMTALA are being enforced, or whether theirpenalties are significant enough to prevent non-compliance.In states with limited regulation of freestand-

ing EDs, the free market is likely to match thesupply of the EDs to areas of demand that can beprofitable. In a previous study, some of us ana-lyzed where freestanding EDs were located inColorado,Ohio, andTexas—the three stateswiththe highest numbers of such EDs.27 We foundthat in Texas and Ohio, neither of which hadcertificate-of-need requirements, freestandingEDs were located in ZIP codes with a more prof-itable payer mix and higher incomes. Addition-ally, in Texas freestanding EDs were located inZIP codes that had more hospital-based EDs,physician offices, doctor visits, and medicalspending per year.Hospital systems and investor-funded enter-

prises are rapidly opening new freestandingEDs. For example, Adeptus Health, a publiclytraded company, has opened more than seven-ty-five such EDs and has plans to open manymore in states such as Ohio, which allow inde-pendent freestanding EDs.28,29

Based on current state laws and regulations,we expect growth in freestanding EDs to be lim-ited to thirty-five states and to be highly concen-trated in the twenty-six stateswithout certificate-of-need requirements.30 We also anticipate thatthe current patchwork of state regulations re-garding opening and operating freestandingEDs will lead to an oversupply of them in stateswith few or no regulations, and fewer of them instates with restrictions or regulations.Texas and Mississippi illustrate both ends of

the spectrum. Texas has no certificate-of-needrequirements, less stringent regulations, andlarge numbers of low-volume freestanding EDsin the suburbs of large cities such as Houston,Dallas, and San Antonio—areas with existinghospital-based EDs.5 Conversely, Mississippi, arural state whose residents have relatively poor

State policiesregulatingfreestanding EDs haveimportant implicationsfor the delivery andcost of acute care.


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access to emergency care, has a highly complexregulatory structure and only one freestand-ing ED.State regulations may change in the face of

lobbying efforts from investor-owned compa-nies entering the freestanding ED market orfrom hospitals fearing competition from a free-standing ED, or because of other concerns aboutcosts associated with freestanding EDs. Com-mercial operators of freestanding EDs are lobby-ing for relaxation of certificate-of-need require-ments.31 Assuming that rates of growth seen inTexas apply nationwide, there could be over800 more freestanding EDs opening across theUnited States in the future if there are no regu-latory changes, and as many as 1,600 more free-standing EDs opening if there is a relaxation ofcertificate-of-need requirements.

Policy ImplicationsFederal law does not define the term freestandingED. Medicare, which imposes requirements onhospital EDs, reimburses only EDs that bill un-der the National Provider Identifier of a hospitalparticipating in Medicare. Providers at indepen-dent freestanding EDs can bill only for a generaloffice visit, which means that the patient ischarged for the facility fee. Therefore, while fed-eral regulation can affect the costs and growth offreestandingEDs, it doesnotdictatehowtheEDsare structured or the services they offer.As a result, state policies regulating freestand-

ing EDs have important implications for thedelivery and cost of acute care. Efforts to stan-dardize requirements for freestanding EDs’ op-erations across states may help patients choose

the acute care site that is most appropriate forthemand avoid unnecessary costs and treatmentdelays. If states want to ensure that all patientshave the right to receive medical care for emer-gency conditions, those that do not already do somight consider imposing and enforcing EM-TALA-like obligations on freestanding EDs atthe state level. Finally, states wishing to restrictthe opening of new freestanding EDs to areas ofmedicalneedmight considerusingcertificate-of-need requirements or similar regulations.

ConclusionFreestanding EDs are rapidly changing the land-scape of acute care delivery. Overall, freestand-ing EDs have the potential to improve access toemergency care, but they may also increasehealth care costs. State regulations will directlyaffect freestanding EDs’ growth, patients’ accessto them, and the quality of care they provide, andwill determinewhether their services are alignedwith the public perception of emergency care.There is great variation in state requirementsregarding the EDs’ licensing, operating, andstaffing patterns. Certificate-of-need require-ments can pose a significant barrier to overallgrowth of freestanding EDs but may be useful indiscouraging their growth in areas that alreadyhave adequate access to emergency care. Varia-tions in state policies may lead to an oversupplyof freestanding EDs in states with few regula-tions, with fewer of the EDs operating in stateswith onerous regulations. As freestanding EDsseek to expand, policymakers canuse these find-ings when considering future regulations con-cerning them. ▪

This study was funded by a HealthPolicy Grant from the EmergencyMedicine Foundation and by a ScholarlyMedicine Grant from Harvard MedicalSchool.

NOTES

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3 Abaris Group. Freestanding emer-gency departments: do they have arole in California? [Internet].Oakland (CA): California HealthCare Foundation; 2009 Jul [cited2016 Aug 17]. (Issue Brief). Available

from: http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/PDF%20F/PDF%20FreestandingEmergencyDepartmentsIB.pdf

4 Sullivan AF, Schatz M, Wenzel SE,Vanderweil SG, Camargo CA Jr. Aprofile of U.S. asthma centers, 2006.Ann Allergy Asthma Immunol. 2007;99(5):419–23.

5 Walters E, Lin J. In wealthy ZIPcodes, freestanding ERs find a home.Texas Tribune [serial on the Inter-net]. 2015 Aug 21 [cited 2016Aug 17]. Available from: https://www.texastribune.org/2015/08/21/

freestanding-emergency-rooms-rise-texas/

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7 American College of EmergencyPhysicians. Freestanding emergencydepartments [Internet]. Irving (TX):ACEP; c 2014 [cited 2016 Aug 17].Available from: https://www.acep


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13 American Board of EmergencyMedicine. Policy on board eligibility[Internet]. East Lansing (MI):ABEM; 2015 May [cited 2016Aug 18]. Available from: https://www.abem.org/public/docs/default-source/policies/policy-on-board-eligibility.pdf?sfvrsn=24

14 Urgent Care Association of America.About urgent care [Internet]. Na-perville (IL): UCAOA; [cited 2016Aug 18]. Available from: http://www.ucaoa.org/mpage/services

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18 Neighbors Emergency Center con-sumer reviews. Yelp [Internet]; 2016[cited 2016 Sept 2]. Available from:https://www.yelp.com/biz/neighbors-emergency-center-austin-2?hrid=h0zfrue8EJ6dVYDVWir3FQ&utm_campaign=www_review_share_popup&utm_medium=copy_link&utm_source=(direct)

19 Overland D. Aetna sues freestandingERs over facility fees. FierceHealth-care [serial on the Internet]. 2013Apr 5 [cited 2016 Aug 26]. Availablefrom: http://www.fiercehealthcare.com/payer/aetna-sues-freestanding-ers-over-facility-fees

20 National Center for Health Statistics.National Hospital Ambulatory Med-ical Care Survey: 2011 emergencydepartment summary tables [Inter-net]. Hyattsville (MD): NCHS; [cited2016 Aug 18]. Available from:https://www.cdc.gov/nchs/data/ahcd/nhamcs_emergency/2011_ed_web_tables.pdf

21 Delgado MK, Staudenmayer KL,Wang NE, Spain DA, Weir S, OwensDK, et al. Cost-effectiveness of heli-copter versus ground emergencymedical services for trauma scenetransport in the United States. AnnEmerg Med. 2013;62(4):351–64.

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24 Le ST, Hsia RY. Timeliness of care inUS emergency departments: ananalysis of newly released metricsfrom the Centers for Medicare andMedicaid services. JAMA InternMed. 2014;174(11):1847–9.

25 National Conference of State Legis-latures. CON—certificate of needstate laws [Internet]. Denver (CO):NCSL; 2016 Aug 25 [cited 2016

Aug 26]. Available from: http://www.ncsl.org/research/health/con-certificate-of-need-state-laws.aspx

26 Rosko MD, Mutter RL. The associa-tion of hospital cost-inefficiencywith certificate-of-need regulation.Med Care Res Rev. 2014;71(3):280–98.

27 Schuur JD, Baker O, Freshman J,Wilson M, Cutler DM. Where dofreestanding emergency depart-ments choose to locate? A nationalinventory and geographic analysis inthree states. Ann Emerg Med. 2016Jul 12. [Epub ahead of print].

28 Sutherly B. Emergency care chang-ing in central Ohio. Columbus Dis-patch [serial on the Internet]. 2016Feb 14 [cited 2016 Aug 26]. Availablefrom: http://www.dispatch.com/content/stories/local/2016/02/14/free-standing-ers-among-emergency-care-changes-in-central-ohio.html

29 PR Newswire. Adeptus Health Inc.Opens 75th Freestanding EmergencyRoom. PR Newswire [serial on theInternet]. 2015 Oct 5 [cited 2016Aug 26]. Available from: http://www.prnewswire.com/news-releases/adeptus-health-inc-opens-75th-freestanding-emergency-room-300153608.html

30 Growth will likely be limited to thethirty-two states with freestandingEDs and to other states that allow theEDs and have limited regulation ofthem. For example, New Mexico hasno such EDs but has approved sev-eral applications to open freestand-ing EDs. Oregon has no such EDsbut has established temporary regu-lations for them. Wyoming licensesfreestanding EDs but currently hasno requirements for them.

31 Royse D. Free-standing ERs eyelobbying to win state approval forgrowth. Modern Healthcare [serialon the Internet]. 2015 Jul 4 [cited2016 Aug 26]. Available from:http://www.modernhealthcare.com/article/20150704/MAGAZINE/307049969


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