As a person ages, health concerns often surface and compound, leading to healthcare costs that can spiral upward. These rising costs can be particularly troubling to seniors on Medicare, Medicaid, and Medicare Advantage plans: their incomes often become fixed or decrease when they leave the workforce.

The Employee Benefit Research Institute estimates that couples need more than $400,000 to cover medical expenses after retirement. Unfortunately, the estimated median savings for sixtysomethings as of December 2018 falls far short of this need at only $172,000.  These high costs are negatively impacting a growing share of aging Americans. The senior population of the United States is growing rapidly: by 2030, one of every five Americans will be over the age of 65 and by 2050, that number is expected to grow almost 90 million.

As the senior share of our population increases, the total amount spent on healthcare costs is also expected to rise, including the costs of treating common senior health conditions such as dementia and Alzheimer’s and common locations of care such as skilled care or facility care.

Lowering Healthcare Costs Will Benefit Everyone

Who pays the bills for high healthcare costs? American households and the federal government share most of the burden of healthcare spending, each covering approximately 28 percent. Private businesses spend almost 20% of that total; state and local government account for 17.1 percent; and other private revenues cover the remainder of the amount spent each year.

Lowering Healthcare Costs for Payers, Systems, Providers and Patients: Have You Considered Home Care?

Lowering healthcare costs will benefit everyone in the healthcare ecosystem, but what are some ways of doing so? There is a widely applicable solution that some may have overlooked: home care. Here’s how home care can help a variety of important stakeholders.

  • Health plans. In-home caregivers, provided by health plans as part of a benefits package, can improve senior wellness and address minor physical concerns before they become major issues requiring expensive treatment. In-home caregiver benefits included in Medicare, Medicare Advantage and Medicaid benefit programs as a form of preventive care can help health plans lower and even avoid high healthcare costs. Wellness programs are a good step and have become increasingly popular among plans, with the goals of stabilizing health, improving overall physical conditions, and preventing illness. Given recent CMS changes, however, now is an ideal time for Medicare Advantage plans in particular to seize the opportunity of non-medical home care in supplemental or other benefits, and lower healthcare costs among the costliest portion of the population – the elderly.
  • Health systems. Health systems such as hospitals and accountable care organizations (ACOs) can also benefit from home care. In-home caregivers, provided by health systems as part of a care-transition program, can help ensure that seniors are treatment compliant, adhere to prescribed medications, receive early intervention for medical conditions, and have adequate social support. These simple supports can help reduce waste, prevent readmissions, reduce the risk of injury, and lower health system costs.
  • In-home caregivers and in-home agencies can help healthcare professionals such as physicians and physician group practices more effectively treat patients with regular patient monitoring, care-plan compliance, addressed activities of daily living (ADLs), and conformity with medication regimens. These supports can help providers and physicians deliver better care to each patient.
  • Patients and families. Patients and families are the stakeholders who are likely to benefit the most from in-home care, and in remarkable ways. For seniors, addressed social determinants of health and activities of daily living can provide optimal health and wellbeing and more robust wallets. With health stable and health concerns addressed early, the number and frequency of acute health events can lead to an overall reduction in unpleasant health experiences and resulting high healthcare costs.

Preventative Care Reduces Healthcare Costs

Preventative care has been proven to reduce long-term costs and home care is ideally suited to help deliver it. Unfortunately, Americans use preventative services at about half the recommended rate: largely preventable chronic diseases account for a whopping 75% of the nation’s medical spending.  According to JAMA, preventative care can be tailored to a person’s age group. For seniors, this includes annual exams, wellness visits, counseling, appropriate vaccinations, screenings and preventative actions including healthy diet, exercise and the avoidance of risky behaviors. A close partnership between a patient and his or her healthcare team can go a long way toward both improved well being and reduced costs.

Improving Seniors Functional Status Lowers Healthcare Costs

The risk of serious illness, complications of chronic conditions and mortality is based on the severity of an individual’s medical conditions and their functional status. Addressing a seniors’ functional status can lower healthcare costs. Functional status refers to the ability to perform normal activities of daily living (ADLs) and fulfill usual roles. ADLs include toileting, bathing, dressing, grooming, feeding and other personal hygiene routines; as well as feeding, walking and transferring. The ability to complete ADLs is strongly associated with improved wellness and lower morbidity among the elderly. For those who struggle with ADLs, a non-clinical home care provider in the home to address those needs can close the functional-needs gap that too often leads to serious – and expensive – health declines.  

In addition to ADLs, improving seniors’ social determinants of health (SDoH) has been proven to reduce long-term costs. SDoH include community participation, optimal social and physical environments, adequate access to healthcare, reliable transportation and availability of resources needed to maintain a healthy lifestyle. Aging individuals are more likely to experience increased isolation from the community, the inability to complete home maintenance tasks, and limited access to transportation. More than 50 percent of those over the age of 65 who do not drive do not leave their home on most days, due to a lack of transportation options. Being homebound without options compounds the detrimental effects of isolation. Home care can provide assistance with maintaining the physical environment, as well as that needed link with the outside world.

Loneliness is associated with high blood pressure, cardiovascular disease, cognitive decline and depression. Reducing loneliness and providing support lessens the chance of exacerbation of chronic illnesses, as well as the general decline in physical condition and cognitive ability that typically accompanies getting older.

Reducing Risks Like Falls In the Home Reduces Long-term Healthcare Costs

Injuries resulting from falls leads to billions of dollars spent and millions of lives drastically changed, often for the worse. For an aging adult, a seemingly minor fall can lead to a loss in the ability to live independently and a severe and rapid decline in physical condition.

A study published in the Journal of Trauma found that adults over 70 are three times as likely to die following a ground-level fall than younger counterparts. The same study concluded that only 22 percent of those age 70 or above were able to function on their own after a hospitalization due to a fall. Over 800,000 patients are hospitalized each year because of a fall, with the average cost of that hospitalization exceeding $30,000. Approximately $34 billion in direct medical costs are incurred each year from falls. Both the cost of treating fall injuries and the chance of falling increases with age, making fall prevention a top priority.  

Numerous factors increase the likelihood of a fall, many of which can be prevented or mitigated with home-care support:

  • Medication use, such as tranquilizers, sedatives, antidepressants and even some over the counter medications
  • Physical conditions such as pain, lower body weakness, Vitamin D deficiency, and difficulty with walking, balance or vision
  • Foot pain and inadequate footwear
  • Home hazards or dangers such as broken or uneven steps, loose throw rugs and clutter

A home care provider can decrease the likelihood of a fall by assessing a patient and his or her surroundings, providing advice regarding needed changes in the environment that will improve home safety, and removing fall risks. An in-home caregiver, through regular contact with a patient, is able to see and report changes in behavior, gait or balance that could lead to a fall, and arrange for early intervention.

To reduce the risk of falling in the home, regular contact with and medication monitoring by a physician is helpful.  Other potential signs that a senior adult may be in need of home-care assistance include changes in physical function and mental status like difficulty keeping track of time or general confusion, poor personal hygiene, neglecting household duties such as laundry or paying bills. The simple presence of a home provider can save a great deal of money and provide aging individuals with improved quality of life and independence for a longer time period than would be possible without that assistance.

Home Care Reduces Costs Associated With Chronic Conditions

According to the CDC, six in ten adults in the United States have a chronic disease. Four in ten adults have two or more. The cost of treating chronic diseases comprises most of the nation’s annual healthcare costs.

  • Heart Disease and Stroke: One-third of all deaths in the United States are caused by heart disease and stroke. The healthcare system spends nearly $200 billion per year treating these chronic conditions.
  • Cancer: The cost of cancer care continues to rise, and is expected to reach almost $174 billion by 2020. Almost 600,000 people pass away each year from this second leading cause of death.
  • Diabetes: More than 30 million Americans have diabetes, costing the healthcare system and employers $237 billion per year.
  • Obesity: Obesity increases the risk of all other chronic diseases. The healthcare system spends $147 billion per year on obesity-related issues.
  • Alzheimer’s Disease: 5.7 million Americans are affected by Alzheimer’s disease. In 2019, the cost of Alzheimer’s and other dementias will be $290 billion.
  • Other: Rounding out the CDC’s list of chronic conditions are arthritis, epilepsy and tooth decay, all of which greatly impact the lives of seniors and the economy.

The risk of most of the chronic conditions listed above can be reduced by making healthy choices. Quitting or never starting smoking, eating healthy, exercising and avoiding excessive alcohol use are the most important things that an aging individual can do to mitigate risk. Additionally, regular wellness checks, appropriate sleep patterns and social activity may help reduce the risk of these chronic illnesses.  In-home caregivers can provide great support for patients who want to create or maintain a healthy lifestyle. A caregiver may provide transportation for doctor appointments, assist with medication regimens, shop for and prepare healthy foods, encourage and assist with physical activity, provide companionship, and more.

Early Intervention Reduces Healthcare Costs

Especially for seniors or those with chronic medical conditions, intervention at the onset of symptoms reduces the long-term costs of care and improves patient outcomes.

For example, a simple wound for someone with reduced circulation or diabetes can become a serious problem if left untreated. Likewise, a case of the flu can be treated with anti-viral medication if diagnosed within 72 hours of onset. This treatment could mean the difference between resting at home and being hospitalized for complications. The data supports the stipulation that delayed treatment is more costly; in 2012 the avoidable costs of medical care due to delayed treatment was $19.8 billion dollars.  

Why do people avoid going to the doctor? High health insurance deductibles and copays are of major concern across all age groups, but for the elderly, there is more to be considered. Aging persons who are isolated or homebound are more likely to delay seeing a doctor at the onset of symptoms due to a lack of transportation, financial stress, fear of being dismissed or ignored by a doctor, and denial that there could be a problem worth investigating.

Ultimately, delaying care is very costly to both the system and to the individual’s physical well-being and quality of life.  A home care provider can provide the encouragement needed to seek medical care at the onset of symptoms. He or she can validate the individual’s concerns and help with detailing the progression of symptoms, and may in fact observe symptoms before the senior patient does. A care provider can also assist with scheduling and provide transportation.

Reducing Unnecessary Emergency Department Utilization Reduces Healthcare Costs

Estimates regarding the prevalence and cost of unnecessary emergency department (ED) visits vary widely. Recently, it was found that chronic conditions accounted for nearly 60 percent of ED visits, costing an annual $8.3 billion in preventable costs. Following action by some insurance plans to limit payment on emergency care deemed unnecessary, the CDC argued that only 5.5 percent of ED visits are unnecessary based on symptoms.  

Regardless of the actual number of unnecessary ED visits, it stands to reason that establishing an ongoing relationship with a medical provider and addressing conditions and symptoms prior to an urgent situation benefits both the patient and the healthcare system.  Emergency rooms are not only costly; they are often crowded, leaving patients to wait for extended periods of time. Further, ED visits often occur when no transportation is available, leaving the patient to call for an unnecessary and expensive ambulance ride to the hospital.

Particularly when addressing chronic conditions, ongoing non-emergency care leads to both the most cost effective method and the most positive outcome. An estimated 50 percent of emergency department visits each year are people with at least one of six common chronic illnesses: asthma, chronic obstructive pulmonary disease, diabetes, heart failure, hypertension and behavior health. If even 30 percent of these incidences could have been treated or prevented in a home care or primary care setting, the savings would be monumental.

Improving ongoing management of chronic conditions, a role that can be partially filled by home care professionals, can play a vital part in reducing emergency department visits.  However, when a true emergency arises, of course, there should be no delay in seeking emergency medical attention. Indications of a medical emergency include bleeding that will not stop, breathing problems, change in mental status, chest pain, choking, coughing up or vomiting blood, fainting or loss of consciousness, feeling of committing suicide or murder, head or spine injury, severe or persistent vomiting, sudden injury, sudden and severe pain, sudden dizziness, weakness or vision change, poison, and severe abdominal pain or pressure.

Reducing Hospital Admissions Reduces Long-Term Healthcare Costs

Among the most common reasons for hospital admission among older adults are falls, cardiac arrhythmias, congestive heart failure, chronic obstructive pulmonary disease, coronary atherosclerosis, diabetes, infection, medication problems, pneumonia and stroke.

Each year, almost 13 million seniors are hospitalized. They tend to remain in the hospital longer than younger people. The average patient age 65 and older remains in the hospital for 5.5 days at an average cost of nearly $4,000 per day. The impact of hospitalization is far weightier than the monetary measures. About one-third of patients over 70 years old leave the hospital more disabled than when they arrived. Patients may leave cured from the acute illness that caused hospitalization, but with a decline in both physical and mental condition. While treating the injury or illness, many of the elderly patient’s regular life activities are interrupted. Their movement is restricted, their diets are changed and their sleep is interrupted frequently. They are subjected to medication changes and medical procedures. The result can be memory loss, cognitive impairment, and difficulty with balance and gait, among other problems.  Bed rest on its own can be detrimental, but a fall within the hospital can be even worse. Medication errors and infections are also a risk during hospitalization.

Largely preventable adverse events during hospital stays cost Medicare about $4.4 billion annually.  Preventing hospital admissions seems critical when viewed in terms of patient outcome. As mentioned above, regular visits from a home care provider can assist an aging individual with reducing his or her risk of nearly every reason for hospitalization. With healthy lifestyle choices, accident and medication error prevention, and early monitoring for symptoms or changes in physical condition and behavior, the aging individual in the care of a non-clinical care provider can improve their chances of staying out of the hospital.

Reducing Hospital Readmissions Saves Healthcare Costs

Readmission to a care facility such as a hospital is a costly problem in terms of both medical bills and patient outcome. One in five Medicare patients is rehospitalized within 30 days of discharge. The cost of readmissions to Medicare is approximately $17 billion per year. Under the Affordable Care Act, The Center for Medicare & Medicaid Services (CMS) now penalizes excess readmissions. From 2012 to 2016 alone, hospitals were forced to pay nearly $1.9 billion in penalties. Thus, hospitals now share a great deal of the costly burden of readmissions.  

Hospitalization is known to lead to a decline in the baseline condition of elderly patients; readmission to the hospital compounds the effects of medication changes, bed rest and the resulting complications, loss of independence and other risks. The most common conditions at risk for readmission to the hospital are congestive heart failure, septicemia, pneumonia, COPD and cardiac dysrhythmias. Non-adherence to medication regimens directly causes 11 percent of readmissions. Further, low patient engagement also increases readmission rates.  

Insurance plans and medical professionals stand to benefit financially from reducing readmission rates. More importantly, patient outcome can be greatly improved by preventing readmission to the hospital. Home care provides the valuable monitoring that a recently discharged patient needs to be compliant with a new medication regimen, to be aware of warning signs and to assist the patient with continuing their normal ADLs. Since medication interactions is a leading cause of readmission, it is important for the patient and all those involved in his or her care to know which discharge medications are replacements for prior prescriptions and which are in addition to the previous regimen. A non-clinical caregiver can assist with reading instructions and asking questions of the physician or pharmacist should any confusion arise. Indeed, home care services can be a formidable and scalable preventative tool when it comes to preventing readmissions.

Home Care Is Preferred Over Other Care Placements

It is clear that the cost of in-home care yields an excellent return on investment, it is also important to note that is by and large the preferred level of care. In-home senior care is desired by most seniors over assisted living facilities, skilled nursing care facilities, and other types of residential care. This is due to the both the disruption in the family that long-term care involves, as well as the cost of long-term care. The flexibility of in-home services is important to many families, in both scope of service and level of involvement of care agencies. For example, families desiring a small amount of assistance can pay an hourly rate for a homemaker or non-clinical caregiver. As the patient’s needs increase, services can increase to include additional homemaker services, a health aide, or even nursing services. These elder care services can delay placement in a facility, keeping the patient and family more comfortable and delaying the exorbitant costs of long-term care.

Home Care Maximizes Healthcare Savings and Provides Excellent Return on Investment

Home care was once only attainable to those with premium insurance plans or the ability to pay out of pocket. Due to recent changes by The Center for Medicare & Medicaid Services, home care costs can now be covered by Medicare plans. This coverage of Home Care Costs stands to improve the quality of care for millions of elderly people and to maximize healthcare savings for health plans, providers, patients and families. Non-clinical in-home caregivers are able to provide the following benefits to patients that have been proven to improve wellness and reduce the costs of healthcare.

  • Assistance with Activities of Daily Living
  • Improvement of Social Determinants of Health
  • Encouragement toward healthy lifestyle choices
  • Monitoring for new or worsening symptoms
  • Assistance with communication with family members or medical professionals
  • Companionship and encouragement toward social activity
  • Continuing the pursuit of hobbies and activities enjoyed by the patient
  • Transportation to and from medical appointments
  • Assistance with medication compliance

The vast majority, as high as 87 percent, of aging adults wish to continue living in their own homes with as much independence as possible. Non-clinical caregivers can make this wish a reality. With vastly improved patient outcomes, everyone benefits when plans pay for in-home care costs.  

May 1, 2019
Health Systems

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