Case Studies

Hospital Administrators Turn to CEP America to Establish an Observation Unit

Santa Clara Valley Medical Center

Hospital Beds 524
Annual ED Visits 132200
ED Beds 25

In 2010, Santa Clara Valley Medical Center faced a growing number of one day stays on its inpatient unit.  The hospital asked Amina Martel, MD, CEP America’s Director of Hospitalist Medicine, to come up with ways to reduce this. Her solution? A medical short stay unit (MSSU), more commonly called an Observation Unit, which dropped the one day stays from 30% of admissions to 20%.

Observation Units, treatment areas that provide beds for hospital assessments without formal admissions, are currently in high demand after the implementation of the Affordable Care Act (ACA). They can now be used to avoid potential fines and create new revenue. RAC audits target admissions under 24-hours, putting payment at risk. In comparison, CMS now reimburses hospitals at a fixed price of approximately $500 per patient plus any line item that the hospital bills for an observation status that lasts from 3 to 72 hours. Observation Units may also help decrease readmission rates as visits are classified as outpatient.

Martel and her team of hospitalists met with emergency physicians early on to establish the diagnoses to be treated and joint protocols for assessment. They decided to start with lower acuity patients who had chest pain, their most common diagnosis for a stay of under 24 hours. Then, six months after they had implemented the process for chest pain work ups, they looked at the next five top diagnosis and created protocols for them. Eventually as the unit continued to operate, they started taking anyone who the emergency physicians thought shouldn’t be discharged but would stay less than 24 hours.

This Observation Unit at Santa Clara Valley Medical Center has 12 telemetry capable beds, a nursing ratio of 4:1 and is staffed by hospitalists. It treats approximately 20 patients per 24 hours and is open 24x7. Martel describes the following key lessons and results:
  • The Observation Unit has been able to decrease the number of one-day stays that involve full admissions from the upper 30% range to 20%.
  • The average length of stay for chest pain protocols was reduced to 14 hours, while the average length of stay for other diagnoses was lowered to 16 hours.  
  • The hospital’s daily census was reduced dramatically from 1,000 acute admissions per month to 600. 
  • The unit continued to build efficiency as they set up protocols and coordinated systematic diagnosis across all the departments involved.
  • The Observation Unit became a release valve and helped to reduce overcrowding in the ED.
Martel’s work at the Santa Clara Valley Medical Center has demonstrated that an Observation Unit, which can be a source of tremendous cost savings to a hospital, can be successful for staff and patients alike. With teamwork, communication, and advanced planning, Observation Units can become key players in the Acute Care Continuum.