New Study Finds Home Care More Cost-Effective to Government than Residential Care

For Release Monday November 29, 1999

Growth in the elderly population and restraint in the health sector have led decision-makers to place an increasing priority on home care services. But until now, very little Canadian research has been able to answer a fundamental question crucial to provincial health care budgets: Is home care for the elderly a cost-effective alternative to care in a long term care facility? In other words, if two elderly clients have the same health needs, where would government see the best value for the amount of money spent: with the client supported at home, or with the client cared for in a residential facility?

A new British Columbia study has now found that, on average, the overall health care costs to government range from one-half to three-quarters of the costs for clients in facility care.

"The central finding of this study was that given two clients with the same level of needs, the best value to government comes from supporting the client at home," said Dr. Marcus Hollander, principal investigator of the study. "Since most elderly clients prefer to stay at home for as long as possible, and are highly satisfied with home care, this means it is good for both governments and clients if the services are there to enable them to stay at home."

The study and its findings are the first results to emerge from the National Evaluation of the Cost-Effectiveness of Home Care, a $1.5 million program of research funded by the Federal Government’s Health Transition Fund. The research program consists of 15 inter-related substudies which are attempting to assess the differences in costs and quality between home care and various forms of institutional care.

Study One, called A Comparative Cost Analysis of Home Care and Residential Care Services, is the first time in Canada that the actual dollar costs to government for home care and residential care clients have been measured for a full range of health costs. The study compared costs for home care and residential care, pharmaceuticals, fee-for-service physician visits and hospital services.

"BC is the only jurisdiction where we could do this type of study because it is the only province that has had, for a number of years, a standardized classification system for all elderly clients who enter the system, whether they go into home care or go into residential care. We can compare apples to apples," Hollander said.

Costs were compared across the same five levels of care needs for home care and residential clients. Data were obtained from all new client admissions to the British Columbia continuing care system in the 1987/88, 1990/91 and 1993/94 fiscal years. Client costs were analysed for one year prior to initial assessment and for three years post-assessment.

The study found that savings of 50 per cent could be obtained if home care replaced residential care for elderly clients who were stable in their type and level of care. The more unstable the client’s health, and the more he or she moved through increasing levels of care, the more home care costs approached the costs of residential care. For clients who died, the costs were higher in home care. "It would appear from the data that home care clients who are dying enter into the acute care system, perhaps having numerous hospital admissions, and get a full range of aggressive medical care that may offset any savings that were obtained by keeping them at home," Hollander said.

The study found that about one-half of the overall health care costs for home care clients could be attributed to their use of acute care hospital services. It also found that when clients go into long term care institutions, their facility costs increase but their use of other services decreases. It appears that staff at residential facilities may be able to care for client needs so that they do not need to be admitted to acute care hospitals as often.

The implication of this study for governments, Hollander notes, is that more services and programs need to be designed to keep clients stable and supported at home. Programs should be developed to reduce the use of hospitals by home care clients, to provide community-based palliative care for the elderly to enable them to die comfortably at home and to provide quick, appropriate and effective care to re-stabilize clients at transition points. He also suggests that a standardized classification system for clients be adopted across the country to enable similar research in other jurisdictions.

"This discussion is not simply about reducing costs, it is also about improving the quality and delivery of services," said Hollander. "More seamless and integrated services can both benefit clients and reduce costs."

While this study indicates that home care can offer significant savings to government, Hollander stressed that it is not known yet whether the burden of costs is simply shifted onto the shoulders of clients and their caregivers. "This is an extremely important question that we are now examining in other studies in the research program," he said. Other studies in the National Evaluation of the Cost-Effectiveness of Home Care will use client logs, caregiver diaries, and interviews to detail all costs born by clients and their families, including the cost of time lost from work for family members.

For more information or to obtain a copy of the study’s 200-page report contact:
 
The National Evaluation of the Cost-Effectiveness of Home Care
308 - 895 Fort Street
Victoria, BC
V8W 1H7
 
Tel. (250) 389-0123
Fax (250) 389-0105
 
e-Mail: info@homecarestudy.com
Website: www.homecarestudy.com
 
An overview of the National Evaluation of the Cost-Effectiveness of Home Care is available here (in Adobe Acrobat format).

FACT SHEET

• Canada’s population is rapidly aging. The "greying" of the population is being seen by health policy makers and planners as posing a significant fiscal challenge for the health care system.
   
• According to the 1996 census, there were 3.6 million seniors age 65+ in Canada. By 2016, when the leading edge of the baby boom generation turns 70, that number will rise to 5.9 million. The greatest rate of growth will be in the "old-old", those people more than 85 years old, who tend to use the most health services. Their numbers are predicted to increase by 115 per cent between 1996 and 2016, going from 371,200 to 798,200 people in Canada.
   
• While the overall dependency ratio (those aged 0-14 and 65+ as a percentage of the population 15-64 years of age) will be about the same in 2016 as it was in 1996 (48.5 to 48.0 respectively), the dependency ratio for seniors will increase from 18.1 in 1996 to 23.6 in 2016 while the dependency ratio for children will decrease from 30.0 to 24.9 over the same period.
   
• It has been estimated that out of the $76 billion annual health budget, the federal and provincial governments spend $2 billion on home care, $7 billion on long term care facilities, $26 billion on hospitals each year.
   
• In Canada, there are three functions of home care: a preventive and maintenance function which is designed to reduce the rate of deterioration for persons with relatively low level care needs; an acute care substitution function where home care substitutes for hospital care; and a long term care substitution function which uses home care as a substitute for facility care. The BC study focuses on the long term care substitution model.
   
• Numerous American studies have found that home care is not a cost-effective substitute for residential care, but is simply an add-on cost.
   
• In Canada there is an untested assumption that home care is cheaper, but very little research has been done to determine whether home care provides quality care at an appropriate price. Numerous questions need to be answered in a Canadian context: Is home care a good value? If it is more expensive, is it in fact superior care and therefore worth paying for? If it is cheaper, is that because the costs are shifted from the government to family and unpaid caregivers? Are the outcomes for patients the same, worse, or better? Do the clients prefer it, despite any shortcomings?
   

Facts on the National Evaluation of the Cost-Effectiveness of Home Care

• The National Evaluation of the Cost-Effectiveness of Home Care is a national program of research funded by the federal Health Transition Fund which will attempt to assess the differences in costs and quality between home care and various forms of institutional care.
   
• The $1.5 million research program consists of 15 inter-related substudies. Each study will examine different aspects of the home care picture. Like pieces of a puzzle, the results from the individual substudies will be put together to give a full picture of the cost-effectiveness of home care.
   
• The research program is being carried out across Canada by a multi-disciplinary team of researchers led by Dr. Neena Chappell of the Centre on Aging, University of Victoria, and Dr. Marcus Hollander, of Hollander Analytical Services Ltd., a national health services research firm headquartered in Victoria.
   
• Six of the 15 substudies will evaluate the cost-effectiveness of home care compared to residential long term care. These studies will compare the costs (formal and informal) of clients treated in their homes to those treated in residential facilities, and will examine the factors contributing to decisions on what home care services are to be provided.
   
• Nine of the 15 substudies will evaluate the cost-effectiveness of home care as an alternative to acute care in institutions. Researchers will examine the cost-effectiveness of specific services, such as home-based intravenous therapy and home care for low birth weight infants.
   
• All 15 substudies of the National Evaluation of the Cost-Effectiveness of Home Care will be completed and available for public release by November 2000.
   

For more information contact:
 
The National Evaluation of the Cost-Effectiveness of Home Care
308 - 895 Fort Street
Victoria, BC
V8W 1H7
 
Tel. (250) 389-0123
Fax (250) 389-0105
 
e-Mail: info@homecarestudy.com
Website: www.homecarestudy.com
 
An overview of the National Evaluation of the Cost-Effectiveness of Home Care is available here (in Adobe Acrobat format).