Another insurer invests in urgent care to cut emergency department visits

Blue Cross and Blue Shield of North Carolina has become the latest health insurer to invest in urgent care centers as a means of saving money on emergency department utilization.

The insurer announced Sept. 12 that it was investing in FastMed Urgent Care, a physician-owned chain based in Clayton, N.C., that has dozens of clinics in the state as well as Arizona. The amount of money changing hands was not released, but it is meant to allow FastMed to build several new outposts in North Carolina. The hope is that if more urgent care facilities are available, patients would use them rather than emergency departments for treatment of minor injuries and illnesses when their primary care doctors’ offices are closed. The North Carolina Blues believes this will lower overall health care costs.

According to the insurer, which now owns a minority stake in FastMed, many of its plans do not charge co-payments that are higher for emergency department use than for other services. However, this depends on the design the employer chooses.

“We don’t want to narrow customer choices,” said Darcie Dearth, the insurer’s spokeswoman. “We’re trying to increase access to care and give customers more choices. If they want to go to an urgent care center, then we are glad to give them that choice.”

RAND Corp. data indicate that shifting nonemergency cases from emergency departments to urgent care or retail clinics could save about $4.4 billion annually. Forty-eight percent of adult emergency department patients not sick enough for hospital admissions said they were receiving care in that setting because their physicians’ offices were closed, according to data released May 22 by the Centers for Disease Control and Prevention’s National Center for Health Statistics. For almost 46%, the emergency department was the closest source of care. FastMed clinics are open 365 days a year and generally close at 7:45 p.m. on weekdays and earlier on weekends.

The insurer said an emergency department visit costs an average of $1,500, but that many of these patients could be treated at urgent care centers for an average of $142.20. Twenty percent of emergency department visits are for nonemergency care, according to the insurer. Reducing this by 5% could cut total annual medical spending by North Carolina Blues by $8 million.

In addition to potential cost savings from increased patient access to urgent but nonemergency sources of care, analysts say investing in other sectors of the health care system may shore up insurer balance sheets. This is considered particularly key, because health system reform limits how much money insurers can make from health insurance premiums.

More health insurers are branching into urgent care, physician practices and other health services. For example, Louisville, Ky.-based Humana announced Nov. 22, 2010, that it was buying Concentra, a chain of urgent care and work site clinics, for $790 million. Pittsburgh-based Highmark has a small investment in MedExpress Urgent Care, which has 79 locations in the region.

“Many health insurers are buying physician practices at this point,” said Bill Baker, partner with the health care transaction services practices at KPMG. “This is primarily driven by regulatory pressures and to generate profit for insurance operations. And in a lot of markets there are well-developed urgent care clinics. People already view them as alternatives to the ER.”

The majority of urgent care centers are owned by physicians or hospitals. There were about 8,700 urgent care centers in the U.S. in 2010, according to the Urgent Care Assn. of America. Fifty percent were owned by physicians, and 28% were under hospital stewardship. Fourteen percent were operated by corporations, and 8% were owned by people who are not physicians.