Expanding hospital at home care: Modeling a financially sustainable program | Tina Burbine

Tina Burbine

The past two years have wrought some extraordinary adaptation in the healthcare sector, including industry-wide growth in extending healthcare capabilities beyond the walls of the hospital.

CMS announced many payment and policy changes to support this shift, including a new reimbursement model for acute Hospital at Home services. The appeal of care-at-home extends beyond the exigent circumstances of pandemic.

Hospital at Home delivers “reductions in clinical complications and mortality, better patient and family satisfaction, better functional outcomes, less caregiver stress, and lower costs when compared with traditional inpatient care.” Payers have also recognized the benefits of Hospital at Home care, with many willing to participate in new coverage paradigms to support this fast-evolving model.

Hospital at Home is now a viable care delivery pathway, and it will help reshape future practice.

However, any service model — regardless of potential — requires strategic planning to ensure success and sustainability.

Developing a financial model

As a health system or provider group begins to form or expand a Hospital at Home program, it’s critical to establish a financial model that summarizes total program costs with a cash flow view to visualize the program break-even point.

By establishing a program cost model early on, the organization strategically positions itself to identify program development overhead and benchmarks for cost efficiency that will help drive scalability. Standard program costs include operating, capital, variable, and fixed costs. Organizations should consider comparing the internal cost of building this service versus buying some or all of these services to weigh impact on revenue.

Hospital at Home operating costs include the staff model, care delivery services being provided, and vendor costs. Hospital at Home staff models typically include a variety of full-time and per diem staff with a combination of physician, LPN, RN, SW, pharmacy, lab, and administrative services.

Leveraging the full scope of internal resource sharing between acute, post-acute, skilled-nursing facility (SNF), and home health teams to fulfill the program skill sets necessary is a cost-efficient approach. Additional operating costs should capture phones, tablets, communication devices, remote monitoring, methods of transport, paramedicine, and medical equipment.

Cost model assumptions are highly educated predictions, evidence, and other local specifications on which any risk or cost drivers are based.

Types of model assumptions for hospital at home programs can include general assumptions (e.g., DRG billing codes and revenue projections), baseline assumptions (e.g., patient growth and program maintenance), staffing assumptions, and cash influx assumptions. These assumptions will drive the overall cost model numbers to estimate cash inflows and outflows from the launch of a program in year one to program maturity.

An organization’s local population health initiatives and patient acuity mix will influence program costs. On average, assume the target Hospital at Home patient population health includes 50% rising risk, 40% high risk, and 10% as super-utilizers.

The key to capturing this patient census is to incorporate real-time identification of the population with rapid, robust clinical decision making and clear clinical criteria driven by the physicians. This patient population includes those with immediate needs and/or chronic conditions that can be addressed by the program model.

A visual representation of an internally built Hospital at Home model highlights cash inflow versus outflow over a five-year time period. The break-even point ideally occurs in the first half of year two, with continued revenue growth afterwards.

Guiding maturity

Benefits of a Hospital at Home program include the value an organization receives from new revenue, reduction in total cost of care, and increased value-based care savings earned.

To accomplish this, it’s important that as a program matures, the volume of higher acuity patients being treated in their homes expands as well. Several revenue streams such as CMS reimbursement, payer investments, and at-risk contract savings will expand as patient volume and acuity levels increase.

If an organization has not pursued CMS’s Hospital at Home reimbursement waiver approval, it’s time to do so. The waiver process is a checklist that validates a program’s ability to meet specific CMS Hospital at Home reimbursement criteria.

Leveraging payer partnerships for early investment is a wise way to support a program’s funds flow in the initial development stage. Hospital at Home programs can also support at-risk contract savings for the organization.

To expedite program growth while expanding funds flow, focus on the three largest cost drivers: speed of program growth, increasing patient volume and acuity, and third-party relationships.

Results that matter

Hospital at Home programs can both reduce cost and improve health outcomes.

As noted by the American Hospital Association (AHA), “In a randomized, controlled trial released in 2020, data from Brigham Health showed that the adjusted mean cost for acute care episodes was 38% lower for home hospital patients than control group patients without appreciably changing quality or safety…Home hospital patients were also more physically active and reported less anxiety.”

Further, a 2021 JAMA Network Open health policy investigation included a systematic review and meta-analysis of nine randomized clinical trial studies and found that patients receiving hospital-at-home care had “a lower risk for readmission by 26% and a lower risk for long-term care admission.”

As the healthcare sector continues to adapt and evolve, these types of results are worthy of investment — and it is possible to build a financially sustainable program to achieve them.

Tina Burbine is vice president for care innovation & enterprise analytics at HealthLink Advisors. She has over 25 years of value-based care, population health and healthcare IT experience.