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Commentary: Is there a model for demonstrating a beneficial financial impact of initiating a palliative care program by an existing hospice program?
Published online by Cambridge University Press: 19 July 2005
Abstract
The value of integrating palliative with curative modes of care earlier in the course of disease for people with life threatening illnesses is well recognized. Whereas the now outdated model of waiting for people to be actively dying before initiating palliative care has been clearly discredited on clinical grounds, how a better integration of modes of care can be achieved, financed and sustained is an ongoing challenge for the health care system in general as well as for specific institutions. When the initiative comes from a hospital or academic medical center, which may, for example, begin a palliative care consultation service, financial benefits have been well documented. These palliative care services survive mainly by tracking cost savings that can be realized in a number of ways around a medical center. We tried to pilot 3 simple models of potential cost savings afforded to hospice by initiating a palliative care program. We found that simple models cannot capture this benefit (if it in fact exists). By adding palliative care, hospice, while no doubt improving and streamlining care, is also taking on more complex patients (higher drug costs, shorter length of stay, more outpatient, emergency room and physician visits). Indeed, the hospice was absorbing the losses associated with having the palliative care program. We suggest that an avenue for future exploration is whether partnering between hospitals and hospice programs can defray some of the costs incurred by the palliative care program (that might otherwise be passed on to hospice) in anticipation of cost savings. We end with a series of questions: Are there financial benefits? Can they be modeled and quantified? Is this a dilemma for hospice programs wanting to improve the quality of care but who are not able on their own to finance it?
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INTRODUCTION
For some time now, the value of integrating palliative with curative modes of care earlier in the course of disease for people with life-threatening illnesses has been well recognized (Brooks, 1983; Bailes, 1995). Whereas the now outdated model of waiting for people to be actively dying before initiating palliative care has been clearly discredited on clinical grounds, how a better integration of modes of care can be achieved, financed, and sustained is an ongoing challenge for the health care system in general as well as for specific institutions.
When the initiative comes from a hospital or academic medical center, which may, for example, begin a palliative care consultation service, financial benefits have been well documented (Raftery et al., 1996; Witteveen et al., 1999; Serra-Prat et al., 2001; Payne et al., 2002; Brumley et al., 2003; Di Cosimo et al., 2003; Smith et al., 2003; Burke, 2004; Cowan, 2004; Elsayem et al., 2004; Chochinov & Kristjanson, 1998). These palliative care services survive mainly by tracking cost savings that can be realized in a number of ways around a medical center. Some of these cost savings include shortened length of stay in general, decreased “bounce back” and emergency admissions on recently discharged patients who return because of symptom management problems, and decreased stays in intensive care units by, but not limited to, dying people. Depending upon how well referral sources are educated and informed in advance of the initiative, these substantial savings can be documented often within 1–2 years (Payne et al., 2002; Cowan, 2004). Starting a palliative program in a hospital entails projecting into the future of patients with a life-threatening illness, anticipating their needs, and allowing for an efficient and more economically viable way of delivering care. This is realized mainly by avoiding costly overtreatment.
However, when a hospice program attempts to initiate a palliative care program, it is projecting its influence on the care of the patient backward on the disease trajectory, attempting to integrate its services earlier. This can often be difficult to accomplish and the financing of such an approach may be difficult. This difficulty stems principally from the lack of costly overtreatment-related costs to be avoided specifically by the hospice. Additionally, hospices are financed in dramatically different ways than are hospitals. Hospices sustain themselves on the (often inadequate) Medicare allotment but can be viable with economies of scale. Patient lengths of stay that are longer than 30 days are generally needed to sustain hospice programs. Shorter, very high intensity length of stays are financially problematic but can be accommodated by large numbers of longer admissions. Thus, the incentive exists to try to project backward both to improve the local health care system's ability to deliver seamless and better care, as well as to introduce hospice care earlier so as to potentially enjoy the benefit of greater numbers of people admitted to and followed in hospice for longer than 30 days.
SAVINGS TO HOSPITALS
Palliative care centers rarely generate money. But they do yield rather significant cost savings for hospitals when approached and studied in the correct model. For instance, Cowan (2004) studied the effect of a palliative care unit on a hospital from two perspectives: overall length of stay and reduction in daily charges once palliative care was consulted. When examining length of stay, Cowan found a reduction of more than 7 days per visit, with a realization of more than $100,000 in savings per year. More remarkably, when examining the second variable—reduced charges after palliative care initiation—Cowan reported a savings of more than $1.8 million per year for the hospital under study. Similarly, Payne et al. (2002) reported that quality palliative care programs can save anywhere from 40–70% of costs for hospitals. Raftery et al. (1996) also reported approximately 50% savings by using palliative care services along with fewer inpatient days and nursing home visits. In our own experience, the Hospice of the Bluegrass (HOB) has been able save between $1 million and $2 million per year for two hospitals in Lexington where they have active palliative care programs (G. Brown, pers. comm.).
Many cancer centers and tertiary care hospitals do not have inpatient palliative care units. But where they exist they have demonstrated similar results. Elsayem et al. (2004) conducted a study of over 300 admissions to the inpatient palliative care center at MD Anderson Cancer Center in Texas. They report collection rates of 57% for all billings as well as a 38% reduction in average daily charges compared to regular hospital beds. They conclude that their program has acceptable utility and cost savings for their hospital.
Smith et al. (2003) conducted a study of another inpatient palliative care unit and found similar results. Using case-matched controls, they demonstrated that their palliative care inpatient unit reduced costs of daily charges by 59% and overall costs by 57%.
HOME PALLIATIVE CARE
Serra-Prat et al. (2001) studied the effects of having a home-based palliative care service on patients. In their study, patients treated using the services of the home-based palliative care model were compared to patients receiving standard of care. They found that those patients receiving home-based care had fewer emergency room and outpatient visits and had shorter lengths of hospital stays. This resulted in a net savings of 71% compared to the patients receiving standard of care only. Similarly, Brumley et al. (2003) were able to document a total cost savings of 45% for palliative care as opposed to standard of care patients. Di Cosimo et al. (2003) also realized similar savings in a study of an Italian-based population of patients, and Burke (2004) argues in a similar fashion for patients in England. Even when more expensive home technologies are employed (i.e., in-home infusion therapies), Witteveen et al. (1999) were able to demonstrate a total savings of $8,000 per patient compared to a similar length hospital stay.
As mentioned above, we are aware of no reported way to demonstrate similar financial savings or benefits when an existing hospice program adds palliative care. Thus, at the Hospice of the Bluegrass, we examined some models and variables in an attempt to pilot such a study.
THE HOSPICE OF THE BLUEGRASS
The Hospice of the Bluegrass is a private nonprofit organization governed by a Board of Directors. The program is a member of the National Hospice Organization, is certified by Medicare and Medicaid, is licensed by the State of Kentucky, and accredited by the Joint Commission on Accreditation of Healthcare Organizations. Hospice of the Bluegrass serves more than 600 patients daily in 23 central, southeastern, and northern Kentucky counties.
History
In 1978 in Lexington, a small group of health care professionals and laypersons sensitive to the needs of the terminally ill formed a hospice program, Community Hospice of Lexington. This group recognized that terminal illness and the time of dying brings a person closer to his or her most intimate concerns. They saw that hospitals and nursing homes allowed little dignity and intimacy to those who had but a short time to live.
Beginning as a small-scale volunteer effort, that movement has grown into a major health care provider in the Bluegrass area. Demand for home-based care through hospice has expanded tremendously since those early years.
In June 1986, the service area of Community Hospice of Lexington expanded to include Woodford and Scott counties. A new name, Hospice of the Bluegrass, was chosen. Franklin County was added in 1987, followed by Bourbon in 1988, Anderson in 1989, and Harrison and Nicholas in 1991. In 1995, Hospice of the Bluegrass merged with Mountain Community Hospice, adding Breathitt, Knott, Leslie, Letcher, and Perry counties to the service area. Expansion continued that year as seven more counties were added, Boone, Campbell, Carroll, Gallatin, Grant, Kenton, and Owen, to create Hospice of Northern Kentucky. In 1996, Hospice opened the Hospice Care Center, an inpatient unit located at Saint Joseph Hospital. Jessamine County Hospice and Hospice of the Bluegrass became partners in 1998. In 1999, Hospice of the Bluegrass and Mountain Heritage Hospice merged, adding Bell and Harlan counties, bringing the total service area to 23 counties. In 2001, Hospice of the Bluegrass opened the Bluegrass Center for Grief Education and Counseling. Hospice of the Bluegrass serves a 23 county service area.
CAN A PALLIATIVE CARE PROGRAM SAVE MONEY FOR HOSPICE?: AN ATTEMPT TO PILOT THREE MODELS
Length of Stay (LOS)
In the Last Acts report card (Last Acts, 2003a, 2003b; Head et al., 2004) states were given grades based on a number of variables that indicated how well each was doing in caring for the dying. With regard to LOS, an A was reserved for states where the median hospice length of stay was 60 days. No state achieved an A or a B. Most received a D, with median length of stay between 15 and 30 days. We hypothesized that length of stay could be lengthened by introducing palliative care earlier and then transitioning to hospice. Thus we examined the differences in length of stay for patients who went directly to the HOB versus those who came to hospice via palliative care. We used the entire population of patients seen in palliative care and then admitted to hospice. Length of stay was calculated from the date of hospice admission including all patient days in hospice accumulated until the patient's death. Data showed that the LOS for this patient group was less than the normal hospice population. The Palliative-Care-to-Hospice group had an average LOS of 31 days whereas the Direct-to-Hospice group had an average LOS of 76 days. The median LOS for the Palliative-Care-to-Hospice group was 9 days and the median LOS for the Direct-to-Hospice group was 17 days.
Drug and Other Ancillary Costs
We hypothesized that the patients who were seen in the palliative care center might have lower costs in several areas once they went to hospice because of being managed by physicians with a hospice mind-set sooner. For example, we assumed that palliative care physicians are often more mindful of drug costs than are other doctors and therefore that when these patients arrived in hospice they might well have lower drug costs for at least the beginning of their admission. Thus, we observed pharmacy costs of a Palliative-Care-to-Hospice group compared to a Direct-to-Hospice group. All patients who went from the palliative care center to hospice comprised the population for review. Of these 71 patients, 20 were selected at random using a blind draw making up the Palliative-Care-to-Hospice group. A comparison Direct-to-Hospice group was selected based on matching diagnosis with the test group. The pharmacy costs for the first 2 weeks in hospice were as follows: Palliative-Care-to-Hospice group: $230/ppt. Direct-to-Hospice group: $94.09/ppt. In addition, when we examined some other cost centers for these same groups we observed the following: for Hospitalizations (number and days): the Palliative-Care-to-Hospice group averaged 9 hospitalizations and 54 days whereas the Direct-to-Hospice group averaged 9 hospitalizations and 63 total days. For a miscellaneous set of cost centers combined (outpatient visits, ER visits, ambulance, physician visits: Palliative-Care-to-Hospice group: $413.15/ppt, Direct-to-Hospice group: $332.05/ppt). Thus, cost results show that the Palliative-Care-to-Hospice group had higher pharmacy costs per patient than the Direct-to-Hospice group, no discernable difference in hospitalizations, and higher ancillary costs per patient. It must be noted, however, that this was not a formal study and, although efforts were made to use matched controls based on diagnosis, the patients in the Palliative-Care-to-Hospice group may represent the “sickest” of the sick and may have had even longer lengths of stay in hospital if they had not been part of the palliative care center. In essence, this group was probably more complicated and difficult to manage compared to the rest of the palliative patient population.
Charitable Giving
We hypothesized that patients who were first cared for by the palliative care physicians and were seen in the palliative care center might have had the opportunity to develop a deeper and even more meaningful relationship to and appreciation for the program than those who went directly to hospice. Perhaps because staff and patient might have come to know one another when the patient was more “him- or herself” (and more ambulatory) that this might have been the case. We further hypothesized that this might lead to more in the way of charitable gifts made to the program. Our findings proved contrary to this belief.
In 2003, 47% (1160 of 2482) of hospice families designated Hospice of the Bluegrass to receive memorial gifts. This is in comparison to a rate of 39% designation of gifts by the families of patients who progressed from the palliative care center to Hospice of the Bluegrass. No gifts were designated expressly to the palliative care center.
Intangibles
We are aware that there may be several “intangibles” involved in any analysis of this type wherein the existence of the palliative care program has indeed benefited the hospice financially (and of course otherwise). One of the authors of this paper (T.G.) is a nationally recognized palliative care specialist whose name is virtually synonymous with end-of-life care in the Lexington and central Kentucky area. The palliative care center may afford him even greater visibility through increased chances to liaise with community physicians. Thereby, the palliative care center expands the overall presence of HOB in ways that lead, for example, to a greater number of direct-to-hospice referrals.
CONCLUSION
We have discussed the issue of whether adding palliative care services financially benefits an existing hospice program. It is clear from the above that rather simple models cannot capture this benefit (if it in fact exists). Hospices cannot realize much in the way of avoiding the costly and perhaps futile treatments that hospitals do. It is also clear from the above that, when adding palliative care, the hospice is no doubt improving and streamlining care but is also taking on more complex patients (higher drug costs, shorter length of stay, more outpatient, emergency room, and physician visits). Indeed, because of the success of HOB, the hospice was in fact absorbing the losses associated with having the palliative care program.
One avenue for future exploration is whether partnering between hospitals and hospice programs can defray some of the costs incurred by the palliative care program that might otherwise be passed on to hospice. Specifically, there needs to be a negotiation in which an understanding is reached that the host hospital will contribute to financing the palliative care personnel once enough time has passed to document the savings to the hospital. This, however, requires a determination of a feasible timetable wherein hospice can demonstrate the savings to the hospital while not assuming all of the costs for too long of a time period. This type of partnership needs to be explored and studied further to determine an ideal solution that will ultimately benefit all parties involved, including the ultimate concern: improved care coupled with seamless service delivery.
We therefore end with a series of questions: Are there financial benefits? Can they be modeled and quantified? Is this a dilemma for hospice programs wanting to improve the quality of care but who are not able on their own to finance it?
ACKNOWLEDGMENTS
The authors thank Tom Smith, M.D. and Patrick Coyne, R.N. of Medical College of Virginia for their advice and assistance with this work.
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