Cost of Aging: Healthcare - The Return of the Housecall

By Mark Olshaker | Care of National Aging In Place Council

“As health care providers, we’re very aware of people who could be cared for at home. But our healthcare system is very siloed, and physicians and hospitals don’t always have the incentives to keep people at home.” 

So states Teresa L. Lee, an attorney and Master of Public Health, who is the Executive Director of the Alliance for Home Health Quality and Innovation, a nonprofit with a mission of leading and sponsoring research and education on the value home health provides to patients and the entire American healthcare system. The problem, she observes, is that the system was built in a certain way, and that way can be summarized by the phrase “fee for service.” 

These issues do not affect older adults in a direct financial way as much as they do the healthcare payment system as a whole. But the indirect effect in terms of higher insurance and Medicare premiums and co-pays and limiting resources, can be profound.

When it comes to medical care, particularly for older adults and the elderly, there is often an inherent tension between payers – the government, insurance companies and individual patients – wanting the keep costs down, and hospitals having to fill beds and providers to perform services for payment....

“We need to create a new system of value-based payments and methodologies rather than just fee for service, and get people to think beyond their own four walls, while still insuring quality,” Lee believes. 

“Changes are happening in healthcare really fast by healthcare industry standards. But the graying of the population is happening even faster.”

The Department of Health and Human Services and Medicare and Medicaid, prodded by policymakers in Congress and the Executive Branch, have pushed providers not just to fill beds, but also to think of population health and community needs in totality. One way this is being instituted is through monitoring readmission of Medicare patients to hospitals for the same condition within 30 days of discharge. The financial penalties are fairly modest, says Lee, but the most important incentive is that CMS – the Centers for Medicare & Medicaid Services – makes public the list of hospitals that perform well and poorly. 

There are certain services that must be performed in hospitals, including surgery and emergency care, both of which are expensive. But there are other inflection points of medical care than can be done just as effectively at home, if the financial incentives are in balance. For example, a tremendous amount of money is spent on end-of-life care in hospitals, which often can be achieved more efficiently for the payer, and comfortably for the patient, with home hospice care.

Since facility-based care is more expensive than home care in almost every case, many experts see the next step should be shared savings constructs that incentivize all the players toward a common goal. These could include establishing target costs for various medical conditions and putting hospitals and physicians at risk for exceeding them for a particular episode, and having them share savings for coming in under projected reasonable costs. Hospitals in Maryland, for example, are now required to operate under a capitation system that pays a certain amount for each covered patient in a given community, regardless of how many or few healthcare resources he or she consumes. Lee characterizes the Maryland experience as, “So far, so good.”

Ultimately, she would like to see a scenario in which everyone who can, will receive the healthcare services they need while remaining at home. This would mean that hospitals, nursing homes, assisted living facilities and service providers have reached an equilibrium point in which costs and capacities are evenly distributed – a true community based system. “That’s the ideal,” she comments. “But who knows if that’s the way it’s all going to play out.”