Wall Street Journal Should Dig Deeper on Observation Care

The Wall Street Journal’s Dec. 1 story on observation care is relatively even-handed and does a good job at bringing to light the highly complex web of regulation, which has gotten a little slice of the U.S. health care system to where it is today. The gist of the story is rather straightforward: 30-day readmissions have fallen significantly since Obamacare, while the number of visits which classify as observation status has gone up. The implication is that patients aren’t actually being given better treatment, they’re just being reclassified under a different status. 

But the story loses its footing a bit when it starts painting all hospitals with the same brush and using individual anecdotes to represent the entire system.

The first point WSJ missed (and it’s something which would make an excellent follow-up story) is that different hospitals and health systems implement observation units in wildly different ways. Yet, the only method the story really describes is the so-called “scatter-bed” method, where patients classified as observation status are mixed in with the general population. When WSJ quotes experts saying, “Patients on observation status can remain in the hospital for days, and typically receive care that is indistinguishable from inpatient stays,” they are essentially describing a hospital which has completely botched its observation care services.

To be clear, if patients are staying on observation status for days, the hospital is doing it wrong. If patients receive care that is indistinguishable from that received by inpatients, the hospital is also doing it wrong. The same holds true for the personal anecdote used later in the story about an 87-year-old man whose wife spent four days in the hospital on observation status after a fall. A subsequent four-month stay at the nursing care facility ended up costing more than $20,000, forcing the couple to liquidate a life insurance policy and savings in order to pay for it, money which they had set aside to pay for their burial costs. Anecdotes like this are tragic and should not happen if the hospital is using observation status for what it was intended. Unfortunately, many hospitals haven’t quite figured out the proper path through the thicket of regulation toward better patient care.

The “scatter bed” model, which seems to be the only model the WSJ is aware of here, is prone to exactly the kinds of abuses described in the article. That is, long hospital stays and similar care to what an inpatient would receive. But another model is the “closed” model. In this model, observation patients are not mixed in with the general inpatient population. Instead, they have a dedicated space in the hospital, usually one near to or with easy access to the Emergency Department.

The staff that runs a closed observation unit are specifically trained in the conditions that are appropriate for observation status, and clearly defined protocols are used to determine which patients qualify and which do not. A well-run, closed observation with specifically trained staff, a dedicated space, and clear protocols, will have its patients in and out in less than 24 hours – not three or four days. Patients who stay in the hospital for this short amount of time wouldn’t have qualified for inpatient status anyway, meaning the hospital would likely be denied payment had they wrongfully admitted them as an inpatient. That’s another reality the WSJ need to dig deeper on. The audits and penalties that the WSJ points out hospitals are responding to work both ways. That is, hospitals will get denied payments by the insurance companies if they wrongly admit someone as an inpatient, or whether they wrongly categorize someone as an observation patient. Hospitals are being required to thread a very narrow regulatory needle. That’s fine – our health care system demands it and our patients deserve it – but it does mean some hospitals are getting it wrong.

Observation care is a trickier needle to thread than many others, although not by any stretch the only one. The WSJ does a good job of pointing out the various incentives, which are forcing change in the system, and the perverse outcomes those incentives are having on certain facilities. But it would be doing patients (and many seniors) a disservice to suggest that all hospitals are using observation care in the way described by the article. Perhaps the next story could chronicle the many different ways health systems are implementing observation services and what those choices mean for patient care, health care costs, and the future of health care as a whole.