A Tale Of Two Cities: Why Poor Areas Have Fewer ERs Than Rich Ones

Across the country, from San Francisco to Boston and Chicago to Atlanta, hospitals have and continue to close emergency services or shut down completely. Not only is this happening in major urban areas, but also in rural communities that already face shortages in access to healthcare. What is the common thread?

While many factors affect a hospital’s decision to stay open or close, the most common cause is financial. It’s not rocket science to understand that hospitals with higher profit margins are more likely to survive than hospitals with lower profit margins. This is true for any business, whether McDonald’s or Marriott. The critical difference, however, is that hospitals are a life-and-death “industry” versus food and travel.

In the United States, 80% of hospitals are privately owned, whether not-for-profit or for-profit. Only a minority of hospitals are publicly owned by local, regional, or federal governments. This means most hospitals are responsible for maintaining healthy profit margins to sustain their mission. That makes sense, you say, since hospitals should compete based on their ability to provide good care. If the local fast food chain starts offering soggy fries or the nearby hotel has stinky bedsheets, for example, people stop frequenting these places, and the market “adjusts” by decreased demand and then potential closure because of low profitability. But that doesn’t happen in healthcare.

The problem is that it’s difficult to measure quality in hospital care, so there’s no easy way for patients to decide where to go. Most patients seek care at a particular facility simply due to geographic proximity.

As a result, ERs serving a higher proportion of patients in poverty are more likely to close than ERs treating more affluent patients. That means low-income communities are left without services, and richer communities may have more than they need. But in that case, wouldn’t people from low-income areas just overflow to their empty beds, and then the system would equilibrate?

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That would make sense if finances weren’t involved. As I wrote about in another article, ERs are required to evaluate and medically stabilize all patients regardless of their ability to pay because of a law called the Emergency Medical Treatment and Labor Act. As a result, the “tale of two cities” occurs because ERs in low-income areas are “cost centers” where hospitals lose money due to a less favorable payer mix, and ERs in wealthier areas are “revenue centers” that generate profit for the hospital. Therefore, hospitals intentionally locate themselves in regions farther away from poorer areas, resulting in more crowded conditions for low-income patients when they go to their nearest available ER. Unfortunately, this doesn’t only result in longer wait times; there is empirical evidence that ER crowding results in higher death rates, not just for patients with critical conditions like heart attacks and trauma, for example, but for all-comers, too.

That’s tragic, you might say. And indeed, it is. However, there are also adverse effects of “too much” care.

Sadly, there have been several reports of hospitals engaging in predatory behavior. A recent New York Times investigation featured truly frightening stories of patients who were held against their will unlawfully by hospital systems. Other healthcare systems from California to Arizona to Florida have also been sued and settled under the False Claims Act for admitting patients who did not require inpatient care and fraudulently “upcoding” their claims to receive higher reimbursement. The U.S. Department of Justice continues to be busy in this arena.

To be clear, I am not advocating for an ER on every street corner. It is well-established that hospitals that treat more of a specific condition are better at doing so. Concentrating procedures in high-volume hospitals reduces hospitalization days and mortality rates. But there does need to be recognition that, left to its own devices, the market will not correct for certain things, and access to critical services like ERs is a good example.

Some people don’t care when they hear about an ER or hospital closure as long as it’s not in their neighborhood. But research has shown that there are spillover effects, too. If someone’s ER shuts down, their emergency doesn’t just disappear. They then seek care in the neighboring ER, which then affects your care too. ERs are known as “safety nets” for a reason, whether they’re treating an NFL player with a concussion, a President with a heart attack, or a homeless patient needing wound care. The safety net isn’t just for some people—it catches us all.