Home Health Care is A Cost-Efficient Alternative to Traditional Inpatient Care

Numerous studies over the years show that home health care can play a significant role in lowering care spending by treating more people in a cost-effective manner when compared to institutional settings – all in the patient-preferred setting of the home. In fact, research shows that when home health care is used as the first post-acute care setting after a hospital stay, it was found to be the most cost-effective setting when comparing average payments across settings such as skilled nursing facilities, inpatient residential facilities, and long-term care hospitals.

Case in point: A study commissioned by the Alliance for Home Health Quality and Innovation a few years ago analyzed the use of home health care (compared to other methods of care) throughout three years of Medicare claims data for post-acute care settings within 60 days of hospital discharge. Nearly 40% of Medicare patients discharged from a hospital into a post-acute care setting use home healthcare. The research showed that despite the fact that home health care as a post-acute care “first setting” represents 38.7% of all Medicare episodes, it makes up just 27.8% of payments—resulting in the “least costly” alternative.

“The variation in Medicare episode payments across different first settings is attributable to first setting and subsequent care used,” said the Alliance about the study’s findings. “When comparing average payments across settings, home health is the most cost-effective.”

Moreover, even though patients receiving home health care had a slightly longer care process compared to someone discharged from a hospital into a skilled nursing facility, the research indicated that so-called “sequence stops” throughout the process tended to be ambulatory (services provided by physicians, outpatient therapy, and hospice), rather than facility-based, for a less-expensive cost to the Medicare system.

Additionally, a recent study conducted by UCLA Research further underscored that patients who were referred to home health care plans had better health outcomes. Hospitals that referred patients to inpatient facilities tended to have shorter lengths of stay and higher readmission rates, according to the study.

Other Areas of Home Health Care Cost Effectiveness

There are other areas in which home health care proves to be more cost effective than traditional inpatient care. For example, the Advanced Practice Nurses (APNs) conducted a study of six Philadelphia academic and community hospitals to determine whether a three-month regime of home care would have a significant impact on re-hospitalizations and costs over a year for hospitalized patients suffering from heart failure and other comorbid conditions. The study found that home care reduces costs by 37% for heart failure patients.

Another study by the RAND Corporation for MedPAC, a nonpartisan legislative branch agency that provides the U.S. Congress with analysis and policy advice on the Medicare program, found that home health benefit ranks highest regarding outcomes and cost-effectiveness for patients who have undergone hip or knee replacement. The study found that patients who received skilled nursing facility or inpatient rehabilitation facility care were more likely to be institutionalized than patients discharged to home. RAND considered post-acute care payments and total episode payments, including the cost of the initial hospitalization for joint replacement provided to patients discharged to home, in its study.

With almost 90 million people set to be age 65 and over by 2050 and most of these people wanting to continue to live at home, home health care is not only what they desire but has also shown to be more cost effective. Study after study indicates that home health for seniors and people with disabilities can not only rein in costs, but can give people better health outcomes and the kind of care they want.

Manchester Specialty provides end-to-end insurance solutions to the home health care industry to help protect the continued growth and success of these organizations. To learn more about our insurance products and services, you or your local agent/broker can contact us at 855.972.9399.

Sources: Home Health Care News, American Association for Home Care, National Association for Home Care & Hospice