Saturday, February 13, 2010

When Contrasted With The Costs Associated With Nursing Homes, Home Care Is A More Desirable Option

By Jack Haddad

Many elders and their families are considering home care as a viable option, as the costs for nursing care facilities rises to astronomical figures. Many elders enjoy the independence of living in their homes, while receiving the required medical care that cannot be furnished from their relatives or friends.

At some point we may need to make decisions for ourselves or our loved ones when living at home alone is no longer possible and more care is needed. But can we afford the elder care costs? How much do the options really cost?

The preponderance of evidence from studies of cost-effectiveness suggests that home health care is less expensive than extended hospitalization from the standpoint of third-party payers, especially when specific patient groups are studied, such as those with incurable cancer requiring parenteral nutrition or individuals requiring intravenous antibiotics.

A prospective clinical assessment by Kramer et al, which was published in the Journal of Health Services Research, reported the following:

Case-mix differences between 653 home health care patients and 650 nursing home patients, and between 455 Medicare home health patients and 447 Medicare nursing home patients were assessed using random samples selected from 20 home health agencies and 46 nursing homes in 12 states.

Home health patients were younger, had shorter lengths of stay, and were less functionally disabled than nursing home patients. Traditional long-term care problems requiring personal care were more common among nursing home patients, whereas problems requiring skilled nursing services were more prevalent among home health patients.

Considering Medicare patients only, nursing home patients were much more likely to be dependent in activities of daily living (ADLs) than home health patients. Medicare nursing home and home health patients were relatively similar in terms of long-term care problems, and differences in medical problems were less pronounced than between all nursing home and all home health patients.

From the standpoint of cost-effectiveness, it would appear that home health care might provide a substitute for acute care hospital use at the end of a hospital stay, and appears to be a more viable option in the care of patients who are not severely disabled and do not have profound functional problems. The Medicare skilled nursing facility, however, is likely to continue to have a crucial role in posthospital care as the treatment modality of choice for individuals who require both highly skilled care and functional assistance.

Moreover, home care appears to be a more viable option in the case of patients who are not severely disabled and who do not have profound functional problems such as mental status impairment or incontinence.

As discussed previously, prospective payment under Medicare is likely to increase the number of elderly patients discharged from the hospital with "subacute" care needs. That said, home health care should be encouraged by public policy as an alternative
for many of these individuals by creating incentives for treating patients with skilled care needs in the home.

Furthermore, there is considerable interest in expanding the scope of home health services to provide a substitute for patients generally treated in nursing homes and covered by Medicaid. Medicaid Waiver Programs (Section 2176) and other demonstration
programs approach this by providing additional services (such as homemakers and adult day care), which assist in compensating for functional disabilities and poor social supports.

In view of the changing demographics of the population, it seems advisable to pursue alternatives to nursing home care for patients in need of long-term care. Onemajor advantage of home health agencies is that they require considerably
less capital to initiate than is required for nursing home construction. On the other hand, it is extremely difficult to provide a range of functional services in the home or community at a cost comparable to nursing home care for patients with heavy care needs in this area. The
cost-effectiveness of the home care option seems to depend in part on the ability to select patients who would otherwise utilize nursing home care but who can be treated in the home at comparable or lower cost.

Jack Haddad, MD, MBA
Portfolio Manager
MD Capital Management

Affiliated Hospitals
Sutter-Roseville Medical Center, Roseville, CA
San Francisco General Hospital, San Francisco, CA
San Jose Orthopedic Medical Group, San Jose, CA
Highland Hospital, Oakland, CA

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