The Cost of an Emergency Department Visit and Its Relationship to Emergency Department Volume

Published in: Annals of Emergency Medicine, v. 45, no. 5, May 2005, p. 483-490

Posted on on December 31, 2004

by Anil Bamezai, Glenn Melnick, Amar Nawathe

Read More

Access further information on this document at

This article was published outside of RAND. The full text of the article can be found at the link above.

STUDY OBJECTIVE: This article addresses 2 questions: (1) to what extent do emergency departments (EDs) exhibit economies of scale; and (2) to what extent do publicly available accounting data understate the marginal cost of an outpatient ED visit? Understanding the appropriate role for EDs in the overall health care system is crucially dependent on answers to these questions. The literature on these issues is sparse and somewhat dated and fails to differentiate between trauma and nontrauma hospitals. The authors believe a careful review of these questions is necessary because several changes (greater managed care penetration, increased price competition, cost of compliance with Emergency Medical Treatment and Active Labor Act regulations, and so on) may have significantly altered ED economics in recent years. METHODS: The authors use a 2-pronged approach, 1 based on descriptive analyses of publicly available accounting data and 1 based on statistical cost models estimated from a 9-year panel of hospital data, to address the above-mentioned questions. RESULTS: Neither the descriptive analyses nor the statistical models support the existence of significant scale economies. Furthermore, the marginal cost of outpatient ED visits, even without the emergency physician component, appear quite high in 1998 dollars, US$295 and US$412 for nontrauma and trauma EDs, respectively. These statistical estimates exceed the accounting estimates of per-visit costs by a factor of roughly 2. CONCLUSION: Our findings suggest that the marginal cost of an outpatient ED visit is higher than is generally believed. Hospitals thus need to carefully review how EDs fit within their overall operations and cost structure and may need to pay special attention to policies and procedures that guide the delivery of nonurgent care through the ED.

This report is part of the RAND Corporation External publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.