Healthcare is Coming Back Home

Published March 30, 2016

There’s no place like home – for healthcare.

A century ago, care for the sick was provided at home. Families took care of each other. Doctors made house calls to look after those who were ailing. Patients paid cash.

During the great insurance and technology waves of the 20th century American healthcare exploded. Blue Cross Plans were founded to help people afford care and insurance coverage became widespread. Great technologies in pharmaceuticals, diagnostics and devices emerged. Huge new hospital complexes became the center of healthcare. And while many more Americans have much more access to healthcare, it’s unclear whether we are all better off.

Costs have exploded. The share of the economy devoted to healthcare jumped from 5 percent in 1960 to 13 percent in 2000, all the way to 17 percent in 2010. Are we getting value? In 1999, The Institute of Medicine estimated that as many as 98,000 people per year were dying from preventable medical errors in hospitals, the equivalent of a 747 crashing every day. We have by far the most expensive healthcare in the industrialized world, while our national health outcomes compete with those of a well managed third world dictatorship.

Perhaps it’s time for a change? More recently there are some shifts away from the hospital. Operations that used to be performed in an inpatient setting have moved to outpatient clinics. More diagnostic and screening procedures, such as colonoscopies, are now performed in doctor’s offices. Drugstore-based clinics have sprung up to diagnose simpler problems like strep throat.

An AARP study revealed that more than 80 percent of people prefer care at home, even when they begin to need help or ongoing healthcare. Patients and families feel more empowered, and are pressing the healthcare system to address their needs. Physicians pay more attention to patient experience. They realize that collaboration leads to better outcomes.

Technology also helps. Smartphones, tablets, and high speed Internet have transformed consumer markets from finance to dating, enabling people to do more from the comfort of home than they could ever have imagined. New technologies are doing the same for healthcare: home dialysis, remote monitoring, home infusion, and home sleep monitoring are just a few examples.

You might think hospitals would resist – in fact they are helping to make it happen. In the old world of fee-for-service reimbursement, hospitals worked hard to generate referrals for expensive tests, procedures, and inpatient treatments. When a patient bounced back to the hospital after discharge, it just meant additional revenue. But Medicare and commercial insurers are moving rapidly toward value based payments, meaning hospitals want patients to be treated in more cost-effective settings and avoid readmission, as long as quality is maintained or improved.

Of course, hospitals continue to perform major surgeries and take care of the sickest patients. However, once those patients are discharged, hospitals that participate in value based payment arrangements such as Accountable Care Organizations (ACOs) and Bundled Payments for Care Improvement (BPCI) want to avoid unnecessary and expensive stays in inpatient rehabilitation centers. If a patient can be safely discharged directly to the home or after a short rehab stay, it helps the hospital’s bottom line and gives patients what they want.

In early days of managed care, health plans were heavily criticized for taking a stand against runaway costs. Now health plans are getting credit for the innovations they are bringing to the market.  In the new accountable care models, hospitals and other providers succeed financially only when quality, outcomes and patient experience goals are met. As pressure for better results grows from patients and Washington, healthcare will inevitably return to the home.