What cost savings could be realized by shifting patterns of use from hospital emergency rooms to primary care sites

Despite worse health status, ethnic minorities use fewer health-care services than whites, a differential that persists across income levels and even for patients with chronic illness (Robert Blendon et al., 1989; David Strogatz, 1990). It remains little understood why, when compared with whites, blacks have higher medical expenditures and Hispanics lower expenditures (Beth Hahn and Doris Lefkowitz, 1992). That blacks and Hispanics are less likely than whites to have private insurance coverage or high income is part of the answer. Nevertheless, other questions persist. Do delays in treatment for medical conditions among blacks result in this group presenting more advanced-stage illnesses for treatment than those presented for other groups? Are blacks more likely to visit facilities whose daily cost of treatment is more expensive than treatment received in other facilities? Blacks and Hispanics are more likely than whites to receive emergency-room treatment for nonemergency medical conditions (White-Means and Thornton, 1989). Does the use of the emergency room for nonemergency treatments provide part of the explanation for higher expenditures of blacks? To what extent are lower medical expenditures among Hispanics associated with limited use of traditional sources of medical care and a preference for cultural medicine and other nontraditional treatment sources? Public policymakers' cost-cutting strategies emphasize discouraging access to the emergency room. This is because they assume that use was a major drain on medical care resources. Thus, discouraging access to the emergency room will save money and force ethnic minorities to use more appropriate (and less costly) outlets. However, this strategy is based on several unexplored issues. First, the strategy presumes that other, more appropriate, medical options are available to ethnic minorities. If the emergency-room is one of few alternatives, what will be the result of such cost-cutting efforts on ethnic minority communities? We need to test the assumption that reliance on emergency room care is more expensive for blacks and Hispanics, given actual healthcare options. Total medical expenditures equal the price per visit times the number of visits. We know that the emergency room is a high-price facility. We do not know whether emergency-room users make fewer annual medical visits than those who do not use the emergency room. Thus, the magnitude of cost savings resulting from reducing emergency-room utilization are unclear. Second, do blacks and Hispanics hold different views of medical care and the role it plays in recovering from ailments? Ethnicity and cultural perspectives form the basis for attitudes about and interactions with health care providers (White-Means and Thornton, 1989). Yet, researchers and public policymakers generate inferences from analyses that seldom appreciate potential ethnic-group differences. The analysis in this paper makes four primary contributions to the literature on medical expenditure patterns. First, we pre* Department of Economics, University of Memphis, Memphis, TN 38152, and Department of AfricanAmerican Studies, University of Wisconsin, Madison, WI 53706, respectively. We gratefully acknowledge research support from the Joint Center for Political and Economic Studies and the Commonwealth Fund, comments by Wilhelmina Leigh, and research assistance by Darrel Gaskins.