Irving-based Family ER+Urgent Care announced Wednesday that it had closed on separate acquisitions that will bring another five freestanding locations under its umbrella.
The deals include ER Centers of America, which has locations in Plano and Lubbock, and the three Houston-area Texas Emergency Care Centers. Financial information was not disclosed, although Austin-based private equity firm Dos Rios Partners financed the deal. Family also owns an urgent care center in Frisco, which will be folded in at a later date, said CEO Scott Pickett. Each facility is licensed by the Joint Commission.
Family ER + Urgent Care employs a hybrid model that can triage non-emergent patients to the cheaper urgent care center in the same facility. It’s a strategy to provide both services to the patient even if they don’t know the difference between the two. And the emergency room is the most expensive place to seek care. A 2010 Health Affairs study pegged cost savings at a total of $4.4 billion in patients who could be seen in a lower-acuity setting did so.
“One of the reasons we went to the hybrid model is we think it aligns better with our values,” Pickett said. “Just because hospital ERs have always seen a big percentage of low acuity cases doesn’t mean we have to do it that way.”
All but one of the acquired facilities (Lubbock has an existing relationship with a nearby urgent care center, Pickett said) will transition into hybrid models and begin offering urgent care services, he added. First will be Plano, followed by the Houston locations. A timeline is still under discussion for how long the entire group will take to transition, but Plano should be complete by the year’s end. There are no immediate rebranding plans, nor does Pickett anticipate any layoffs.
Part of the impetus for the acquisition was to grow larger to get more negotiating power with the payers, he said. Not all of the emergency facilities are in network, and he said he was looking “to have more scale” in order to be better positioned with the insurance plans. He declined to comment about whether the two Family facilities were having trouble negotiating in-contract deals.
The Houston-area facilities are located in Cypress, Atastocita, and Pearland. The acquisitions will group freestanding centers in pockets of the state where the median household income ranges from about $67,000 (In Irving, where Family’s first location was) to more than $96,000 (in Cypress). The decision is in line with a trend in the industry to open these facilities in more affluent, privately insured locales. (The U.S. median household income was $53,482 in 2014, according to the Census.)
A study published this week in the Annals of Emergency Medicine journal declared that freestanding facilities were “located in ZIP codes that had higher incomes and a lower proportion of the population with Medicaid.” A Texas Tribune investigation found that, statewide, freestanding emergency centers are located in neighborhoods with average incomes 49 percent higher than the state’s. The reason Family ER + Urgent Care’s move falls along with this trend is simple, Pickett says. Medicaid, Medicare, and other public plans do not reimburse freestanding facilities for service, yet, as a licensed emergency center, their staffs must evaluate each patient and stabilize them before discussing cost.
“We’d be happy to be in those areas if we got paid just like any medical facility, right?” He said. “But they actually have to pay the doctors and the nurses.”
The freestanding segment is also hardly immune to the consolidation seen in other healthcare sectors. Most significantly, Texas Health Resources acquired a 50.1 percent stake in Adeptus Health’s First Choice chain of emergency centers, which brought 27 of the facilities under the Arlington system’s wing.