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Study: Observation units can save hospitals millions


Adding observation units in hospitals could save $4.6 million per facility and $3.1 billion nationally each year, according to a study.

The rising demand for acute care has caused more crowding in EDs in U.S. hospitals, according to background information in the study, which is scheduled for publication in Health Affairs. With hospital care accounting for more than 30% of total 2009 healthcare expenditures, alternative solutions are needed to bring costs under control.

A hospital observation unit, a dedicated space usually near or within an ED, can be a viable alternative to an inpatient admission for many patients who cannot be safely discharged to their homes following an ED visit. About a third of hospitals have observation units.

In what they believe is the first attempt to quantify the potential financial impact of observation unit expansion, researchers conducted a systematic literature review to find the average cost savings per observation unit visit. They used national survey data to estimate the number of hospitals with sufficient ED visits to justify acquiring a dedicated observation unit. The study considered the impact of specific diagnoses on its cost-saving estimates.

“The wider use of observation units may create cost savings and should be a model for acute care redesign to increase value in the U.S. healthcare system,” Christopher W. Baugh, MD, clinical instructor of emergency medicine at Harvard Medical School and an attending physician in the Brigham and Women’s Hospital Department of Emergency Medicine, said in a news release.

The study abstract is available at


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