Why Health Plans Should Focus on Post-Acute Care

Published February 5, 2019

Until recently, third-party payers sought to manage total healthcare costs by focusing heavily on the biggest expense: inpatient hospital care. What happened to patients after discharge from an acute care facility was little more than an afterthought. This situation has been evolving over the last 35 years such that the value of post-acute care is becoming increasingly important to health plans.

Why is post-acute care important?

Broadly speaking, post-acute care is defined as all treatments after a hospitalization. The quality of post-acute care has a lot to do with prevention of re-admission to an acute care facility. Good post-acute care entails identification of problems that can be addressed early enough to prevent re-admission.

Patients are readmitted during post-acute care for several reasons, all of which could be managed with effective post-acute care. The reasons include prescriptions for several medications, some of which may interact with one another in unpredictable ways. Close monitoring for such side-effects may prevent return visits to the hospital. A substantial proportion of discharged patients do not completely understand the possible side effects of their medications. Still others do not fully understand their own diseases. Patient education could easily be reinforced by effective administration of post-acute care.

The costs of post-acute care have been rising faster on average than those of all other sectors of the healthcare market, with a 70% increase in a decade. As much as 40% of the total costs of a hospitalizable event is spent on post-acute care.

Variability in post-acute care

Within their own network of acute care hospitals and health systems, third-party payers may not have much opportunity to take advantage of substantial cost differences. Nevertheless, it has been well-documented that total healthcare costs vary enormously across wide geographic areas.

There may be only a small number of acute care hospitals in a given region; by comparison the number of providers of post-acute care services is very large. Greater numbers foster competition for price as well as for quality. This differentiation among post-acute care providers is more difficult to do within provider networks, where there tends to be more uniformity of quality and cost. Health plans should view this price variability as an opportunity to optimize outcomes per dollar spent.

Patient experience matters

Health plans have been concerned with customer satisfaction for some time. Patient experience is now one of the many metrics used by health plans to determine reimbursement rates. Post-acute care is one area where plan managers can focus attention on patient satisfaction, not least because patients may be more sensitive to the quality of care provided to them in their homes. After all, the period of recovery at home is likely to be much longer at home than in an acute care facility.

Patient experience may also be enhanced when the patients feel that they are still being taken care of after the acute episode is over. In some industries, this is referred to as “service after the sale.” Consumers are increasingly likely to expect relationships rather than merely business transactions. On the other hand, hospitals would rather not have patients return after the acute episode is over. To the contrary, health plans penalize hospitals for readmissions. Health plans can meet the needs of patients and hospitals by investing more resources into preventing readmissions by augmenting the level of post-acute care services.

Future trends

The trend toward increasing importance of post-acute care has been occurring for some time, and is likely to continue for the foreseeable future. The population is aging, and this means there will be many more joint replacements and cancer treatments. Mobile monitoring and wearable technologies provide opportunities to manage post-acute care in patients’ homes. The patients themselves are increasingly demanding increased services at home. Plan managers should recognize the opportunities available to find quality, affordable post-acute care options and to pursue them.