By John Seetoo
The Covid-19 pandemic and government enforced lockdown rules hastened the growth of the home care sector within the healthcare industry. New technology innovations have made telehealth and virtual doctor consultations almost ubiquitous. Due to increasingly stringent reimbursement caps from Medicare and private insurers, the home healthcare platform is expected to comprise as much as $265 billion (25%) of Medicare services by 2025, according to a study conducted by McKinsey & Co. This shift is not expected to result in any decrease of medical care quality or access.
Hospital at Home
The Hospital at Home protocol is the outpatient provision of acute services, which hospitals have begun to deploy to cut costs and to serve patients better. It has become a natural outgrowth of the new technology breakthroughs for acute care – and concern for rampant medical bills – that do not require hospital locations in order to be utilized.
An NIH article cited three key areas where Hospital at Home metrics are determined to be successful:
- If the program effectively substitutes a lower cost outpatient care vs. a more expensive inpatient one (reduction on unnecessary scans, tests, etc.);
- When care not requiring higher risk procedures (i.e. infection from catheters, etc.) is excluded from a Hospital at Home program to reduce complications and other health afflictions that would have been prevented in a hospital setting, and when consultation with multiple physicians are unnecessary;
- When a prohibitively higher reimbursement rate for a Hospital at Home recommendation in order to be priced comparably to an inpatient stay is not required.
Johns Hopkins Medicine recently touted a Presbyterian Health Care assessment of its Hospital at Home platform, which is being used especially for elderly patients at various hospitals and VA care facilities nationwide with some impressive results:
- Compared to similar hospitalized patients, Hospital at Home patients experience better clinical outcomes: lower rates of mortality, delirium sedative medication use, and restraints. They report better patient and family satisfaction, less caregiver stress, and better functional outcomes.
- Cost savings of 19% to 30% compared to traditional inpatient care;
- Lower average length of stay;
- Fewer lab and diagnostic tests compared with similar patients in acute hospital care;
- Advances the Triple Aim of clinical quality, affordability and exceptional patient experience.
The Covid-19 effect on various aspects of home care has been palpable:
- McKinsey found that in as early as February 2021, telehealth use had grown 38% and at least 40% of patients expected to continue using it, whereas patient use had only been 11% pre-pandemic. Medicare telehealth use grew from 840,000 patients in 2019 to over 52 million in 2020.
- Remote patient monitoring has also gained significant traction. Deployment of remote patient monitoring for ambulatory management of Mayo Clinic Covid-19 patients demonstrated efficacy of 78.9% engagement rate, 11.4% for 30-day ER and 9.4% for 30-day hospitalization rates with a 0.4% mortality rate over the same period.
- Digital health market venture investment has more than tripled from $8.2 billion in 2019 to over $29 billion in 2021. It cooled off in 2022 and early 2023 due to uncertainty newly legislated regulation from FDA, CMA, DEA and the FTC, but looks to pick up once again in the latter half of 2023 now that there are clear guidelines going forward.
At the state level, home health care is certainly expanding. Spectrum News 1 reported earlier this month that New York Governor Kathy Hochul is close to signing new legislation that would give local health departments greater discretion in providing core health services, such as immunizations, verbal assessments and consultations, and counseling under the home health care umbrella. There would also be state mandated insurance reimbursement guidelines and provisions.
Beth Zborowski of the Washington State Hospital Association had this to say about the program:
“We felt the Hospital at Home program was a positive addition to health care in our state, allowing patients better access to treatment that could be given outside the walls of the hospital. Often the best patients for the hospitals at home program are often ones that had the potential to become “stuck” in the hospital once admitted. At this point, any hospital that was operating the Hospital at Home program on May 11, 2023, can continue operating the program until May 11, 2024, provided that the hospital complies with certain requirements. We will advocate during the 2024 state legislative session to further extend this program.”
An Axios article from June cited that home based palliative care has also grown as an alternative to hospice, thanks to new legislation in some states that have become more flexible for end-of-life care. A study of 7.5 million cancer patients published by Jama Network noted that 54.5% of the decedents died in home or hospice palliative care in states with prescriptive palliative care laws.
The study noted that effective state-level intervention is appealing, as it necessarily has a broader reach than a patient-level intervention and may require fewer additional resources. The subsequent improvements were thought to complement or enhance already established interventions at the individual level, such as the Physicians Orders for Life-Sustaining Treatment or advance care planning. A home palliative care environment was determined to prompt higher quality communication among clinicians, patients, and their health care proxies to ensure that patients’ goals of care were honored at the end of life.
The Value Based Care Incentive
The Value Based Care model has gained significant traction of late, and is likely an additional incentive for the growth of home health care. The Centers for Medicare and Medicaid Services (CMS) has been advocating for Value Based Care:
- Doctors get paid a fixed fee per patient.
- If the patient’s annual health care costs fall below that fee, the doctor retains the difference.
- If the patient’s annual health care costs exceed that fee, the doctor has to ante up the difference.
An RBC Capital Markets report cited why value based care initiatives will spur the growth of home based care thanks to both new healthcare technology initiatives and changes in the medical infrastructure environment. For example, health insurers are starting to create their own physician staffed clinics, drug retailers like CVS and Walgreen are expanding into other areas of healthcare services, and even non-healthcare conglomerates like Amazon are entering the arena. Value based care entails many home health care parameters, including testing, medication, and other factors not requiring hospitalization.
A Bumpy Road
It’s not all roses on the home-care trend. Although the Covid-19 era and Medicare policies have driven the rise of hospital home referrals, home health care agency referral rejections have also increased, due to skilled nursing shortages. As of the beginning of 2023, these rejections reached a high of 76%, according to CarePort.
The nursing shortage problem is exacerbated by the home health care requirement of med-surg (medical surgical) nurses in many cases, according to Incredible Health.
Certain types of care, such as post-surgical rehabilitation, can actually cause hospitals to lose revenues when outsourced to programs such as Hospital at Home. Siva Nadarajah, president and co-founder of JOGO Health, which provides telehealth solutions for neuromuscular, musculoskeletal, and chronic pain afflictions, noted:
“We (JOGO Health) help hospitals add Tele Rehab to their rehab services to bring in new revenue. Most hospitals lose revenue when homecare rehab is outsourced. We have become a new revenue stream for the hospitals and help them keep their patients in-network”
Looking Ahead
Grandview Research valued the Home Health Care market at $362.1 billion as of 2022 with a CAGR growth rate of 7.96 to 2030. This takes into account the size of the Baby Boomer generation now qualified for AARP, with the number of global elderly people estimated to reach 1.5 billion by 2050. 84 million of that figure will be in the US, and will represent 21% of the American population by that same quarter-century time frame.
The size of the market, the rapid growth of the aging demographic, and the inherent level of disposable income available will make the new technological, pharmaceutical and other treatment methods that can be implemented for a lower cost and at greater patient convenience and satisfaction, extremely bullish for the foreseeable future. It appears that the Home Care Sector trend and its corresponding allure for investors shows no sign of slowing down and is likely to accelerate over the course of the upcoming decade.
