The Atlantic: “The Hospital Is No Place for the Elderly”

The December 2013 issue of The Atlantic promotes the home as the ideal place to care for the increasing numbers of frail older adults in the United States. In “The Hospital is No Place for the Elderly,” author argues that payment structures, such as readmission penalties to hospitals, are starting to disincentivize hospitalization as the first choice of care.

Home-care providers have been in operation for decades, but the current climate of health reform has increased their visibility as they have promise to provide comprehensive treatment as well as increase cost efficiency by keeping individuals out of the hospital. However, up until now, the business case has proven challenging:

For doctors, nurses, health systems, and insurers, providing in-home service costs money. Medicare pays for hospitalization, but it does not pay for much by way of in-home care, or for social workers, or for time spent coordinating complex cases and traveling to homes and talking with caregivers. Where in-home primary care has existed, it has tended to be a foundation-funded experiment, or a charitable project, or part of a vertically integrated system like the VA, which can capture any savings. [A] home-care program at Washington Hospital Center runs at a 30 percent loss. Meanwhile, hospitals lose “heads in beds,” and therefore revenue. Medicare—which is to say, taxpayers—may save money, but it has no mechanism either to track savings or to pay providers and insurers for hospitalizations that do not happen.

As the author recognizes, the shift in the Affordable Care Act toward more home- and community-based services, capitated payments, and care coordination will bend this cost curve and make it easier for institutions to invest in home- and community-based care:

 Obamacare is changing the business calculus by creating alternatives to fee-for-service payment. It is beginning to set up new provider networks and payment schemes that let health systems and insurers share in what they can save by preventing unneeded treatment (while also requiring them to shoulder some of the risk of cost overruns).

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