Many hospitals already have some variety of emergency diagnostic and treatment units.
HMOs and physicians should welcome this level of care. At the same time, the national average for a hospitalized patient was about five days, with admissions of one day often being denied as unnecessary. Observation units, developed in emergency rooms, serve this need. Between 1955 and 1971, ER visits increased 367 percent, exceeding the growth of any other hospital service. HMOs that contract with hospitals that have an observation unit in their ER will find that they have happier, healthier members and lower fees, as Graff points out.