Some nonprofit hospitals use ERs as loss-leaders to gain new clients and improve bottom line

In an article entitled “City Hospitals Reinvent Role of Emergency,” The New York Times reports that some hospitals in NYC are spending millions of dollars to renovate and expand their emergency rooms (ERs), in some cases adding such things as private rooms with flat screen TVs and art therapists to entertain waiting children. There is an economic logic to these expenditures.  We typically think of ERs as a money-losing service that hospitals provide in order to meet standards for tax exemption. And while it’s true that most ERs lose money for hospitals, they are also vital sources of paying patients: “the insured patients who do come through the same doors and who wind up being admitted for surgery and other care are their economic lifeblood. In fact, a majority of inpatient admissions at New York hospitals come through the emergency room.”  In these instances, more humane charity makes good business sense.

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