In part one of this article (here), I pointed out how home healthcare has an impact on all American taxpayers, and that because of a rapidly aging population, healthcare costs will also rapidly scale up. In this article, I will show how home healthcare is an effective method to manage healthcare costs and provide the very best care for patients.

A short recap of part 1:

  • In 2018, 60M Americans were covered by Medicare.1
  • Roughly 10,000 Americans turn 65 each day 2
  • By 2026, 21% of the US population will be over 65. That is up from 14% in 2012 3
  • By 2030, 72M Americans will be over 65, nearly doubling the 2009 number of 36.9M 4

An accepted home healthcare industry estimate is that 80% of home healthcare patients are over the age of 65, and thus they are covered by Medicare. This means that Medicare, and thus the American people, will be the largest insurer of home healthcare services in the United States. And the need for these services will continue to grow at a nearly exponential rate. Healthcare programs and their subsequent costs will continue to play a large part in any political debate at least through the 2020 Presidential election. And thus, we owe it to ourselves to better understand how we can best manage those costs.

Cost Comparisons

Hospital stay costs vary by state and by procedure, but the average hospital stay costs in the US is $3,949 per day. 5 Compare this to the average home healthcare therapy visits cost of $115. This is not to suggest that home healthcare will replace needed hospital visits. Instead, the case is to be made that home healthcare should be used more often to prevent readmissions.

In part one of this article, I cited a study published in The American Journal of Accountable Care, and they found that patients who received home healthcare immediately after an emergency visit, had after 90 days, healthcare costs that were 35% lower than non-home healthcare patients, and a readmission rate nearly 10% lower than non-home healthcare patients. Researchers extrapolated figures out to a national level just the five procedures they studied and found that savings would equate to about $3B for Medicare.6 In 2017, readmissions cost Medicare $17B,7 so you can see how greater use of home healthcare would benefit driving down these costs, as well as the implied better care for patients as fewer of them are readmitted for additional health care.

Where is home healthcare not being used

While most people in the healthcare profession agree with the benefits of home healthcare, usage rates of home healthcare are not equally distributed across the United States. Part of this could be because of the vast expanse of rural Western states may not have providers, but in most cases, home healthcare therapy is not being prescribed by doctors. Today, on average, 50% of all national Medicare discharges are NOT assigned ANY post-acute care. These patients are presumably left to follow a set of post care instructions given to them from their doctor, and to visit the doctor at a later date. These are the patients most vulnerable to readmissions and according to CMS, found in states such as AK, WY, HI, OR, MT, ND, WA, NM, SD, and MN. 8

Next steps for the home healthcare industry

Looking at the data, it appears self-evident that in order to better manage health care costs, we need to see a decline in Medicare discharges NOT receiving assigned post-acute care. As the study pointed out, with just a small sampling of five procedures, the potential financial impact is huge. But home healthcare is not only a financial boon, it also allows us to deliver the very best patient care.

What more we can do:

  • Encourage more people to become therapists. There is a huge need for therapists today, and with an aging population, there will be a growing need.
  • Work closely with our political leaders and help them understand the positive financial and patient care impact of home healthcare.
  • Find incentives to encourage home healthcare agency growth in rural western states. One of the unstated reasons why there are fewer post-acute care assignments in rural western states is because of the physical distance doctors, therapists, and patients. The miles needed to travel to deliver care can be a financial disincentive.

 

References:

  1. The Centers for Medicare and Medicaid Services “CMS Fast Facts” January 2019
  2. S. Census Bureau
  3. Ibid
  4. Ibid
  5. Fay, Bill (September 2018) “Hospital and Surgery Costs”, retrieved from https://www.debt.org/medical/hospital-surgery-costs/
  6. James Howard, MD; Tyler Kent, BS; Amy R. Stuck, PhD, RN; Christopher Crowley, PhD; and Feng Zeng, PhD (March 4, 2019) “Improved Cost and Utilization Among Medicare Beneficiaries Dispositioned From the ED to Receive Home Health Care Compared With Inpatient Hospitalization”
  7. Walker, Brent, (December, 20, 2017) “Hospital Readmission Statistics You Need to Know”, https://insights.patientbond.com/blog/hospital-readmission-statistics-you-need-to-know
  8. Excel Health, “Industry Trend Report”, Q3 2018