Protocol driven ED observation units (EDOU) have been shown to improve outcomes for patients and payers, however their impact on an entire health system is unknown. Two thirds of US hospitals do not have such units.

To determine the impact of a protocol-driven EDOU on health system length of stay, cost, and resource utilization.

A retrospective, observational, cross-sectional study of observation patients managed over 25 consecutive months in a four-hospital academic health system. Patients were identified using the “admit to observation” order and limited to adult, emergent / urgent, non-obstetric patients. Data was retrieved from a cost accounting database. The primary study exposure was the setting for observation care which was broken into three discrete groups: EDOUs (n = 3), hospital medicine observation units (HMSOU, n = 2), and a non-observation unit (NOU) bed located anywhere in the hospital. Outcomes included observation-to-inpatient admission rate, length of stay (LoS), total direct cost, and inpatient bed days saved. Unadjusted outcomes were compared, and outcomes were adjusted using multiple study variables. LoS and cost were compared using quantile regressions. Inpatient admit rate was compared using logistic regressions.

The sample consisted of 48,145 patients who were 57.4% female, 48% Black, 46% White, median age of 58, with some variation in most common diagnoses and payer groups. The median unadjusted outcomes favored EDOU over NOU settings for admission rate (13.1% vs 37.1%), LoS [17.9 vs 35.6 h), and cost ($1279 vs $2022). The adjusted outcomes favored EDOU over NOU settings for admission rates [12.3% (95% CI 9.7–15.3) vs 26.4% (CI 21.3–32.3)], LoS differences [11.1 h (CI 10.6–11.5 h)] and cost differences [$127.5 (CI $105.4 - $149.5)]. Adjusted differences were similar and favored EDOU over HMSOU settings. For the health system, the total adjusted annualized savings of the EDOUs was 10,399 bed days and $1,329,443 in total direct cost per year.

Within an academic medical center, EDOUs were associated with improved resource utilization and reduced cost. This represents a significant opportunity for hospitals to improve efficiency and contain costs.