New research shows that a virtual at-home care program has the ability to curb costs for hospitals.
However, the cost savings differed based on payer mixes, according to a recent study published in JAMA Network Open. As the virtual at-home care program studied was not currently reimbursed, hospitals lost money for patients with Medicare or commercial insurance because of lost revenue from inpatient stays, but saved money for uninsured patients or Medicaid beneficiaries.
“While these findings should encourage safety net systems looking for out-of-hospital care alternatives, they should be alarming to payers and health care regulators,” researchers wrote. “These results indicate that current payment structures encourage hospitalization of patients who may no longer require inpatient care due to advances in clinical medicine and likely serve as an impediment to development and implementation of innovative care models that provide more patient-centered, safe, high-value care out of the hospital.”
Los Angeles General Medical Center is a teaching hospital and trauma center that serves 10 million residents. The organization launched its Safer@Home program in 2022. The program offers hospital-level care in the home setting through remote patient monitoring and virtual check-ins.
Researchers from the Los Angeles General Medical Center and the University of California, San Francisco School of Medicine performed an evaluation of the Safer@Home program. As part of the study, researchers examined data for 876 patients who received care through the program from 2022 and 2023. This data was then compared to 1,590 matched control patients.
Overall, the Safer@Home program helped the hospital achieve net savings of $5.6 million for the patients enrolled in the program.
Still, researchers found that the cost savings were associated with the unfunded patients and Medicaid beneficiaries in the program. Meanwhile, patients under Medicare and commercial insurance were associated with revenue loss.
Specifically, the hospital saved a net average of $8,380 per Medi-Cal and $10,934 per self-pay patient while incurring losses of $4,143 and $25,999 per Medicare and commercially insured patient, according to the study.
“Modeling demonstrated that revenue based on payer mix, rather than avoided variable hospital costs, was the primary factor of net hospital savings and losses,” researchers wrote in the study.
Los Angeles General Medical Center primarily serves Medicaid beneficiaries and uninsured patients, so researchers also examined the financial impact of a more standard payer mix for comparison.
Researchers found that with the combination of a more typical payer mix and the hospital’s daily variable hospitalization costs, enrolling 1,000 patients in the program, without reimbursement for its operations, would have led to a loss of $11.22 million.
Payers, meanwhile, saved costs regardless of payer mix, according to the study, “because inpatient stays were replaced with much less expensive all-virtual home care.”
Ultimately, the researchers’ key takeaway was that a hospital-level virtual care at home program can lead to hospital cost savings. Still, they said payer reform is necessary for hospitals with standard payer mixes to benefit, and for this model to scale more broadly.
“These findings indicate that the Safer@Home all-virtual care model is therefore not only cost-effective, but cost-reducing, while providing the extra value to the patient of enabling faster return to a home environment,” the study’s authors wrote.
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