Who do freestanding emergency departments treat? Comparing Texas hospitals to satellite and independent freestanding departments in 2021 and 2022

Abstract

Objective

The objective was to describe characteristics of emergency department visits to Texas satellite and independent freestanding emergency departments (FrEDs) relative to hospital emergency departments (EDs).

Data Sources and Study Setting

The study used all 2021–2022 hospital and FrED discharges from the publicly available Texas Emergency Department Public Use Data Files (PUDF).

Study Design

We conducted a descriptive analysis, comparing patient and visit characteristics at satellite and independent FrEDs and hospital EDs using chi‐square tests. We characterized the top 20 diagnoses and procedures ranked by volume, treatment intensity, and potentially avoidable ED use.

Data Collection/Extraction Methods

Discharge data from 2021 to 2022 were combined for the analysis, and ED data at critical access hospitals were excluded.

Principal Findings

Our sample consisted of 21,605,421 ED visits, 76% occurring at hospitals, 12% at satellite FrEDs, and 12% at independent FrEDs. Compared with hospitals and satellite FrEDs, patients to independent FrEDs were younger, healthier, more likely covered by private insurance, and less likely to be identified as non‐Hispanic Black or Hispanic. Visits at satellite and independent FrEDs were more likely to be of moderate and low intensity and potentially avoidable.

Conclusions

Our results underscore the need to address potentially avoidable utilization of emergency services.

What is known on this topic

• Freestanding emergency departments (FrEDs) have expanded rapidly in Texas, targeting patients in non‐rural areas who are higher income and privately insured.

• Research suggests the entry of FrEDs has resulted in a net increase in utilization of emergency services.

What this study adds

• This study is the first to describe the universe of care delivered at FrEDs.

• Independent FrEDs provided a greater proportion of routine testing and screening for COVID‐19 relative to satellite and hospital emergency departments (EDs).

• Patients seeking care at FrEDs were younger, healthier, more likely covered by private insurance and visits were more likely to be potentially avoidable relative to hospital EDs.

1. INTRODUCTION

Over the last decade, the number of freestanding emergency departments (FrEDs) across the country has increased substantially. Most growth occurred in Texas, which, as of May 2023, had 338 FrEDs that were either operated independently (n = 211) or owned by a hospital and commonly referred to as a “satellite” (n = 127). ¹ Texas FrED facilities are required to operate 24/7 with at least one licensed emergency physician and nursing staff present. ² Independently operated FrEDs are separately licensed and, unlike their hospital‐affiliated counterparts, are not certified by the Center for Medicare and Medicaid Services (CMS) for reimbursement (apart from relaxed rules during the COVID‐19 public health emergency) ³ and therefore not subject to the Emergency Medical Treatment and Active Labor Act (EMTALA) standards. ⁴ Texas' regulations impose a similar standard to independently operated FrEDs by requiring insurance companies to pay for initial evaluation for emergent conditions and treatment (if present). ⁴ Previous studies report that independent FrEDs in Texas choose to locate in areas with higher incomes while both tend to locate in areas with higher shares of the population covered by private insurance. ⁵ , ⁶

Early support for FrEDs was driven, in part, by their potential to function as more efficient substitutes for traditional hospital‐based emergency departments (EDs). Recent work assessing the proliferation of retail clinics in New Jersey supports the notion that patients with non‐emergent conditions may substitute care at hospital EDs for less expensive and more convenient treatment. ⁷ However, evidence suggests there is little difference between commercial prices for the same services between FrEDs and hospital EDs. ⁸ Moreover, existing work examining the growth of Texas FrEDs suggests that they did not reduce hospital ED volumes. ⁵ , ⁹ Evidence from Currie, Karpova, and Zeltzer ¹⁰ corroborates these findings as their study suggests that after urgent care centers (UCCs) entered the market Medicare spending increased, with UCCs likely serving as entry points for hospital services despite offering a lower cost of care. While informative, existing studies use payer specific data leaving important gaps in our understanding of the patient population's experience and utilization in Texas FrEDs.

This study used ED discharge data to describe the census of satellite and independent FrED patient characteristics, patient diagnoses and procedures in Texas compared with hospital EDs between 2021 and 2022.

2. METHODS

2.1. Data

We obtained the universe of treat and release ED discharges occurring between 2021 and 2022 from the Public Use Data Files (PUDF) provided by the state of Texas Health and Human Services Commission. ¹¹ Starting in January 2021 FrED (satellite and independent) facilities were required to provide discharge data to the state in addition to the already reporting hospital EDs. ¹² The PUDF data include patient sociodemographic characteristics, diagnoses, and procedures for all hospital and FrED visits as well reporting facility identifiers. The Texas Health Care Information Collection (THCIC) assigns all hospitals and FrED facilities a unique identification number for reporting purposes.

We identified independent and satellite FrEDs in the PUDF using an emergency medical care facilities list that is made publicly available by the Texas Department of State Health Services (DSHS). ¹ The file provides the assigned THCIC identification number as well as the state license number for each facility. We created a new facility type indicator identifying hospital EDs, satellite FrEDs, and independent FrEDs and combined the facility file with the discharge records using the unique THCIC identification number. We excluded data from critical access hospitals (n = 88) from the sample because FrEDs target higher income, non‐rural locations. ⁵ , ⁶ One limitation of the public use facilities list is that it provides only a point‐in‐time list of facilities that are required to report and the state does not make a longitudinal file available for public use. To overcome this, we obtained additional data on satellite and independent FrED facility opening and closing dates for every facility licensed in the state over the period to construct a complete census of licensed FrED facilities including those that subsequently closed. Cross referencing those data we found our combined analytic file contained data from 93% to 97% of licensed satellite and independent facilities in 2021 and 2022.

We extracted patient diagnosis codes, procedure codes, and sociodemographic variables from the PUDF. Sociodemographic variables included age, sex, race, and ethnicity (non‐Hispanic Asian, non‐Hispanic Black, Hispanic, non‐Hispanic Other, and non‐Hispanic White), which was required to be collected from providers per Texas law, and payment source (Private insurance, Medicare, Medicaid, VA/Tricare, self‐pay, and other).

2.2. Analytic approach

We conducted a descriptive analysis to characterize ED visits at satellite and independent FrEDs compared with hospital ED visits. We first compared sociodemographic patient and clinical characteristics between hospitals EDs, satellite FrEDs, and independent FrEDs. Next, we collapsed the primary diagnoses and first‐listed procedures into clinically meaningful categories using the Agency for Healthcare Research and Quality Clinical Classifications Software (CCS) tools for ICD‐10‐CM diagnoses ¹³ and services and procedures ¹⁴ to compare visits across facility type. We then examined the top 20 CCS diagnosis and procedure categories by volume in hospital EDs to the rank of occurrence based on volume in FrEDs. This allowed us to understand whether patients with common hospital ED diagnoses and procedures also received care at similar rates in FrEDs.

Finally, we compared the complexity, severity, and intensity of visits across facility type. Using all 25 potential diagnosis codes available for each visit, we calculated the Charlson Comorbidity Index (CCI) score to classify visits into those with a score of 0, 1, 2, or 3 or more, indicating patient complexity. ¹⁵ , ¹⁶ We then used the primary diagnosis codes to identify emergency room visits that were potentially avoidable and could have been more appropriately managed in a primary care setting. ¹⁷ There are many definitions of preventable ED utilization. ¹⁷ , ¹⁸ , ¹⁹ , ²⁰ Our primary approach mirrored the definition adopted by the Texas DSHS to complement existing work in the state, identifying preventable ED utilization based on a set of International Classification of Diseases, Tenth Revision, Clinical Modification (ICD‐10‐CM) codes that were adapted from the California Statewide Collaborative Quality Improvement Project. ¹⁷ , ²¹ This approach assigns the primary diagnosis code as preventable (yes; no) if it is included in the code set constructed by the Texas DSHS. For generalizability to the broader literature, we also used the updated version of the New York University (NYU) ED algorithm to classify each ED visit by medical urgency, based on the primary diagnosis' ICD‐10‐CM code. ²⁰ This algorithm assigns probabilities and classifies each ED visit into one or multiple probability adjusted categories including emergent and not preventable/avoidable (i.e., chest pain, tachycardia), emergent but preventable/avoidable (i.e., dehydration), emergent but primary care treatable (i.e., muscle strain), not emergent (i.e., low back pain, headache), injury, alcohol, drug use and mental health‐related. We averaged the algorithmically assigned probabilities and identified codes as non‐emergent if the code was most likely to be non‐emergent where ties were assigned either emergent but preventable/avoidable or emergent, primary care treatable consistent with Johnston et al. ²⁰

Last, we characterized intensity of services provided during each ED visit using Current Procedural Terminology (CPT) codes for Evaluation and Management visits. ²² Intensity was defined as minor (99281, 99282), moderate (99283), high (99284, 99285) and critical care (99291, 99292). Patient and clinical characteristics were compared across facility type using chi‐square tests.

Data management was conducted using Stata version 17.0 (StataCorp). The study was determined to be non‐human subjects research and was approved by the Texas A&M University Institutional Review Board.

3. RESULTS

Sociodemographic characteristics of ED visits to hospitals, satellite, and independent FrEDs are provided in Table A1. Out of the 21,605,421 visits, the majority of visits occurred at hospitals (N = 16,390,439 or 76%), with equal amounts of visits distributed across satellite FrEDs (N = 2,561,513 or 12%) and independent FrEDs (N = 2,653,335 or 12%). In the final quarter of 2022, our analytic sample included 389 hospital EDs, 118 satellite FrEDs, and 222 independent FrEDs.

Overall, the patient population at independent FrEDs was younger than hospital EDs and satellite facilities. Patients 65 years or older represented 15.08% of visits to hospitals, 13.81% to satellite facilities, and 7.48% to independent FrEDs (p < 0.001). In addition, we observed significant differences in the assigned racial/ethnic composition of patients. For example, the share of visits among patients identified as non‐Hispanic Black and Hispanic at independent FrEDs was smaller (10.81%, 21.80%) relative to hospitals (20.63%, 34.61%) and satellite FrEDs (14.84%, 38.68%), respectively (p < 0.001). Private insurance was the expected source of payment for 30.96%, 34.51%, and 84.28% of visits to hospitals, satellite FrEDs, and independent FrEDs, respectively (p < 0.001). Medicaid accounted for the second largest share of visits to hospitals (25.67%) and satellite FrEDs (29.95%), followed by self‐pay (23.13%, 16.89%). At independent FrEDs, self‐pay made up 7.90% and all other expected sources combined accounted for 7.82% of visits, with Medicaid and Medicare making up only 3.93%. This is consistent with non‐hospital‐affiliated independent FrEDs being unable to bill Medicare and Medicaid.

In Table 1, we display the top 20 primary diagnoses (collapsed into clinically meaningful categories) at hospital‐based EDs ranked by volume and the associated rank at satellite and independent FrEDs. The top 20 hospital ED CCS diagnosis categories accounted for 50.33%, 56.75%, and 53.51% of visits to hospitals, satellite FrEDs, and independent FrEDs, respectively, indicating a more homogenous patient population at FrEDs relative to hospitals. There was considerable overlap in diagnoses across facility type with satellite and independent FrEDs sharing 18 and 15 of the top 20 CCS categories with hospitals. However, the top‐ranked diagnosis category at hospitals was abdominal pain (accounting for 4.79% of visits) while other specified upper respiratory infection (8.31%) and exposure, encounters, screening, or contact with infectious disease (16.80%) ranked first at satellite and independent FrEDs, respectively. We examined diagnoses separately by year and found the most common diagnoses were nearly identical between 2021 and 2022 (Tables A2 and A3). The top 20 ranked diagnoses at satellite and independent FrEDs are provided in Table A4.

TABLE 1.

Top diagnoses at Texas Hospital EDs, satellite FrEDs and independent FrEDs, 2021–2022.

	Hospital EDs		Satellite FrEDs		Independent FrEDs
CCS Category	Rank	%	Rank	%	Rank	%
Abdominal pain and other digestive/abdomen signs and symptoms	1	4.79	5	3.93	5	4.21
Other specified upper respiratory infections	2	4.54	1	8.31	3	6.93
Nonspecific chest pain	3	4.23	10	2.65	9	2.51
COVID‐19	4	4.16	4	4.38	2	10.96
Superficial injury; contusion, initial encounter	5	3.49	3	4.54	8	2.60
Musculoskeletal pain, not low back pain	6	2.98	8	2.88	7	2.66
Urinary tract infections	7	2.84	6	3.10	14	1.82
Sprains and strains, initial encounter	8	2.77	2	4.55	6	3.45
Other specified complications in pregnancy	9	2.55	24	1.24	43	0.39
Respiratory signs and symptoms	10	2.26	12	2.11	4	5.27
Open wounds to limbs, initial encounter	11	1.94	9	2.70	10	2.18
Headache; including migraine	12	1.93	15	1.88	11	2.17
Skin and subcutaneous tissue infections	13	1.83	11	2.14	13	1.92
Nausea and vomiting	14	1.74	16	1.75	25	0.79
Viral infection	15	1.71	7	2.94	15	1.40
Open wounds of head and neck, initial encounter	16	1.45	18	1.55	20	0.99
Fracture of the upper limb, initial encounter	17	1.35	21	1.38	22	0.89
Spondylopathies/spondyloarthropathy (including infective)	18	1.34	20	1.46	18	1.05
Other unspecified injury	19	1.32	22	1.30	35	0.51
Otitis media	20	1.10	13	1.96	24	0.82
Total discharges (N) and percent of total (%) represented by top 20 diagnoses at hospital‐based EDs	16,390,439	50.33	2,561,427	56.75	2,653,322	53.51

Note: The anchored facility type is hospital‐based emergency departments (EDs). ICD‐10‐CM diagnosis codes were collapsed into clinically meaningful categories using the AHRQ Clinical Classifications Software (CCS) for ICD‐10‐CM Diagnoses (https://hcup‐us.ahrq.gov/toolssoftware/ccsr/dxccsr.jsp).

Abbreviation: FrED, freestanding emergency department.

Source: Texas Emergency Department PUDF.

We provide the top 20 services and procedures (collapsed into clinically meaningful categories) at hospital‐based EDs ranked by volume and the associated rank at satellite and independent FrEDs in Table 2. The top 20 CCS procedure categories accounted for 94.26% of classified hospital ED visits, 96.52% at satellite, and 92.72% at independent FrEDs. Satellite and independent FrEDs both shared 18 of the top 20 procedures categories at hospital‐based EDs. The most frequent procedure category at hospitals was CT scan of the abdomen, ranked third at satellite and independent FrEDs. Microscopic examination (bacterial smear, culture, and toxicology), which includes COVID‐19 antigen testing, was the most frequently occurring category at satellite (17.07%) and independent FrEDs (37.70%). We display the top 20 procedures for satellite and independent FrEDs in Table A5.

TABLE 2.

Top services and procedures at Texas Hospital EDs, satellite FrEDs, and independent FrEDs, 2021–2022.

	Hospital EDs		Satellite FrEDs		Independent FrEDs
CCS category	Rank	%	Rank	%	Rank	%
CT scan abdomen	1	12.05	3	10.13	3	6.63
Laboratory—Chemistry and Hematology	2	11.78	4	10.08	6	4.34
Microscopic examination (bacterial smear, culture, toxicology)	3	10.22	1	17.07	1	37.70
Other diagnostic radiology and related techniques	4	10.02	2	14.65	4	6.54
Other therapeutic procedures	5	9.26	5	8.18	2	9.77
Computerized axial tomography (CT) scan head	6	6.91	7	5.23	11	3.03
Routine chest x‐ray	7	6.27	6	7.68	9	3.26
Other diagnostic ultrasound	8	3.89	9	2.63	15	1.35
Other CT scan	9	3.79	10	2.62	12	2.16
Other Laboratory	10	3.32	8	3.61	8	3.60
Electrocardiogram	11	3.31	13	2.09	18	0.72
Consultation, evaluation, and preventative care	12	3.23	15	1.80	10	3.19
CT scan chest	13	2.23	14	1.81	14	1.74
Medications (injections, infusions, and other forms)	14	1.84	12	2.30	7	4.30
Diagnostic ultrasound of abdomen or retroperitoneum	15	1.84	17	1.20	22	0.45
Suture of skin and subcutaneous tissue	16	1.63	11	2.47	13	1.78
Magnetic resonance imaging	17	0.74	21	0.57	37	0.02
Nonoperative urinary system measurements	18	0.69	16	1.43	16	0.94
Other respiratory therapy	19	0.65	24	0.25	19	0.65
Incision and drainage, skin and subcutaneous tissue	20	0.57	20	0.71	20	0.55
Total discharges (N) and percent of total (%) represented by top 20 procedures at hospital‐based EDs	13,914,754	94.26	2,085,418	96.52	2,460,170	92.72

Note: The anchored facility type is hospital‐based emergency departments (EDs). Discharges that listed a single facility code for E&M visit were excluded from analysis. Procedure codes were collapsed into clinically meaningful categories using the AHRQ Clinical Classifications Software (CCS) for Services and Procedures (https://hcup‐us.ahrq.gov/toolssoftware/ccs_svcsproc/ccssvcproc.jsp).

Abbreviation: FrED, freestanding emergency department.

Source: Texas Emergency Department PUDF.

Figure 1 displays statistically significant (p < 0.001) differences in the distribution of visits by facility type and treatment intensity (low, moderate, high, critical care). Critical care accounted for less than 1% of visits for each facility type. At hospital EDs, 53.55% of visits were classified as high intensity (CPT 99284, 99285), 40.77% at satellite FrEDs, and 37.88% at independent FrEDs. The largest share (14.92%) of low intensity visits occurred at satellite FrEDs, while having similar rates at hospital EDs (12.12%) and independent FrEDs (12.06%).

FIGURE 1.

Texas Emergency Department Visits by Treatment Intensity and Provider Type, 2021–2022. Treatment intensity is based on Current Procedural Terminology codes and is defined as “low” (CPT 99281, 99282), “moderate” (CPT 99283), “high” (CPT 99284, 99285), and “critical care” (CPT 99291, 99292). ED, emergency department; FrED, freestanding emergency department. Source: Texas Emergency Department PUDF.

In Table A6, we display the distribution of visits by the CCI score diagnosed during the ED visit. Hospital EDs treated the most complex patient population with 21.85% of visits identifying one or more patient comorbidities and three or more in 3.85% of cases. The share of visits with one or more comorbidity was lower at satellite (17.75%) and independent (2.77%) FrEDs. This difference was statistically significant (p < 0.001).

The share of potentially avoidable ED visits by facility type following the Texas DSHS and NYU ED algorithm definitions are provided in Table A7. According to the DSHS definition ¹⁷ , ²¹ (Panel A) largest share of avoidable visits occurred at satellite FrEDs (12.11%), followed by independent FrEDs (9.03%) and hospitals (7.98%) and the difference was statistically significant (p < 0.001). The measure of non‐emergent potentially avoidable visits based on the NYU ED algorithm ²⁰ (Panel B) suggested the largest share of avoidable visits occurred at independent FrEDs (19.65%) followed by satellite FrEDs (17.57%) and hospitals (15.81%). Both measures indicated that satellite and independent FrEDs experienced larger proportions of avoidable visits relative to hospital‐based EDs. The top 10 CCS diagnosis categories based on volume among preventable visits at each facility type are displayed in Table A8. Respiratory infections comprised roughly 45% of preventable visits at hospital EDs, 54% at satellite FrEDs, and 62% at independent FrEDs while urinary tract infections accounted for 30%, 22%, and 17%, respectively.

4. DISCUSSION

FrEDs have become an important source of emergency medical services in Texas. However, no study has so far described the universe of patients seen by FrEDs. We examined ED visits between 2021 and 2022 and found that nearly 24% of visits occurred at satellite and independent FrEDs. Relative to hospital EDs, patients at independent FrEDs were younger, less likely to be identified as non‐Hispanic Black and Hispanic, and much more likely to be covered by private insurance, while patients at satellite FrEDs more closely tracked the population treated by their hospital counterparts. Visits at satellite and independent FrEDs were more likely to be respiratory related, led to more procedures that involved testing for COVID‐19, and more likely to be classified as being of moderate and low intensity severity.

Our work contributes to the growing number of studies describing the patient population of FrEDs. Our findings that FrEDs generally serve the privately insured and that patients at independent FrEDs were also much healthier relative to satellite FrEDs and hospital EDs complements earlier examinations of Texas FrEDs. ⁵ , ²³ Dark et al. ⁵ found that FrEDs locate in geographic areas with higher household income, and income is correlated with health. ²⁴ Such geographic preference is logical for independent FrEDs as they cannot bill Medicare or Medicaid for their services.

Consistent with Ho et al. ⁸ who examined ED claims submitted to Blue Cross Blue Shield of Texas, we found that users of FrEDs presented with similar diagnoses as hospital EDs while all facilities saw similar proportions of visits with a billing code of 99281 and 99282 (between 12% and 15%) that displays minor intensity treatment. Further, authors noted that in 2015, the proportion of visits with a billing code of “moderate” (99283) was 36.5% at hospitals and 49.1% at FrEDs—we observed 33.64% at hospitals, and 44.17% and 49.33% at satellite and independent FrEDs. We also add additional context by calculating the proportion of likely avoidable emergency room visits. Across two separate measures we found that satellite and independent FrEDs experienced larger proportions of potentially avoidable visits indicating FrEDs do not reduce wasteful ED utilization. ⁸

Our study has a few limitations. First, our analytic window aligned with the COVID‐19 emergency which altered ED utilization early in the pandemic. ²⁵ It is difficult to assess whether there was a differential impact on utilization between hospital EDs and FrEDs over the period as the scope of our analysis is limited to 2021 and 2022 and we have no pre‐pandemic data on FrEDs. A report by the Texas Department of State Health Services suggested that in 2019, 10.1% of hospital‐based ED visits were avoidable ²¹ —we calculated 7.98% between 2021 and 2022 suggesting a smaller decline than reported elsewhere. ²⁶ Second, the data may suffer from misrepresentation of some patient characteristics including race and ethnicity, and despite near universal reporting by FrEDs, records may be incomplete or may not list all procedures and services provided as part of the ED visit that providers will bill insurers for. We assessed the number of reported procedures by facility type and found no evidence of a systematic difference in reporting, giving us confidence that differential reporting does not have a major influence on our results.

5. CONCLUSIONS

Our study sought to compare treat and release emergency room visits to satellite and independent FrEDs with hospital EDs in 2021 and 2022. Our findings suggested FrEDs more commonly served low‐complexity patients with private insurance coverage and provided less intense treatment relative to hospital EDs. Additionally, compared with hospital EDs, larger proportions of visits to satellite and independent FrEDs could have been managed in a primary care setting. Visits to FrEDs represent nearly one quarter of Texas ED discharges highlighting the need for research and policy communities to consider the role of these facilities on hospital volumes, including inpatient services, and other factors influencing increased utilization of emergency room services including the availability of primary care services.

Supporting information

Data S1. Supporting information.

Marthey D, Ramy M, Ukert B. Who do freestanding emergency departments treat? Comparing Texas hospitals to satellite and independent freestanding departments in 2021 and 2022. Health Serv Res. 2024;59(4):e14304. doi: 10.1111/1475-6773.14304