Economic issues in observation unit medicine

The overall financial effect with observation medicine is cost savings because of avoidance of hospital admissions and the resultant avoidance of higher costs. This article examines the overall economic effect of implementing emergency department observation units, which varies at individual institutions depending on the physicians' threshold for hospitalization of patients. Avoiding hospitalization with observation does dramatically lower costs to the health care system. This article outlines the issues related to cost that affect physicians and others making patient care decisions about observation units.