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Health Care Industry

Is it still home sweet home care? - financing home care

Business & Health, Jan, 1993 by Kim Anderson

Patrick Holcomb was born in May 1989 with spina bifida, a congenital defect characterized by imperfect closure of the spinal column. Before leaving the hospital, he had undergone a tracheostomy, in which a breathing tube was inserted into the trachea. He also had a gastrointestinal tube inserted for feeding. In October, he went home, although he needed 24-hour nursing care. After three years, Patrick still needs a nurse for 16 hours a day and remains dependent on a ventilator.

Patrick's father, Jeffrey Holcomb, a vice president and part owner of Enecotech, an environmental consulting firm in Denver, saw dramatic increases in his company's insurance premiums as a result of his son's health care needs. Enecotech, with about 200 employees, had several standard Blue Cross and Blue Shield health plans in effect in different locations when Patrick was born.

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Today, the Minnesota branch of the company contracts with Medica, a Minneapolis-based third-party administrator and managed care company, which manages its home health care cases.

Enecotech's Holcomb says, "It's hard to factor in the increased productivity and savings in time home care can provide. I was driving 20 miles to the hospital twice a day for the first six months of Patrick's life. Now, I just go home."

The combination of high technology and skilled nursing care is allowing sicker patients to be treated at home. In Patrick's case, it was $30,000 cheaper to treat him at home, according to a case manager at Medica. However, cost savings are not always a given.

In many cases, home care is more cost effective only when the patient's family can help provide care, says Carolyn Clemens, an analyst and case manager at the Principal Financial Group, a financial services company in Overland Park, Kan., that offers insurance and financial products. The firm administers claims and provides case management services for Payless Cashways Inc., in Kansas City, Mo. The company is a retail building materials supplier, with 18,000 employees in 195 locations.

In one case that Clemens managed for Payless Cashways, a child was receiving intravenous antibiotic therapy in the hospital. The family wanted to bring the child home so he could continue to receive therapy there for two weeks. Because the family was uncomfortable administering the medication, which the child needed three times daily, the cost of a nurse for each visit was higher than it would have been for room and board at the hospital.

"The company paid for the therapy because it was provided for in the benefits and that was what the family wanted," says Clemens. Rather than steer the patient toward the most obvious cost effective choice, Payless Cashways works with its vendor to manage home health care costs when that type of care is appropriate to the patient's treatment.

Although the amount Payless Cashways spends on home health care had almost doubled between late 1989 and 1992, it was still a small percentage--less than 3%-- of the company's total health care expenditures, says Clemens.

Not a panacea

As advances in home infusion therapy, neonatal and pediatric treatments, and ventilators, for example, allow patients to be treated in their homes, employers are more closely managing their home health care costs.

"I used to think home health care was the answer," says Karen Agnitch, administrator of contracted services for Parker Hannifin, a manufacturer of motion control products, in Cleveland, with 25,000 employees. "I still think it's the answer for many of our patients, but we have to manage it every day."

Agnitch notes that without negotiated contracts with home health care agencies and medical equipment suppliers, home health care in many cases would be comparable to or more expensive than hospital care.

For example, the company paid for treatment for an employee with cancer. When the family wanted to continue his care at home, Parker Hannifin priced one of the drugs he was taking and found it would be more expensive to administer the drug at home.

So, the company purchased the drug from a vendor with which it had a contract and saved 50% to 60% off the price of the drug. In addition, because of contracted services, the price for home care nurses fell from approximately $1,200 per day to $358 per day, says Agnitch.

In one instance, a 22-year-old with a history of craniotomy was to have been readmitted for a postop infection. (Craniotomy is a surgical operation that requires opening the skull, as in brain surgery.)

Through case management, Parker Hannifin was able to avoid $13,072 in hospitalization costs. The company also negotiated the home health care fees. The hospitalization costs were estimated at $11,200 for 14 days. Followup home health care was estimated at $5,744 for nursing and IV therapy. The final negotiated price was $3,872 for home care.

Agnitch says vigilant case management is necessary because the number of at-home cases the company is paying for has doubled in recent years. In addition, Parker Hannifin, a self-insured company, maintains a staff of four nurses that conduct utilization review and case management. "There are no established reasonable and customary fees in the home health care industry, so prices can vary widely," says Agnitch.

Health Care Industry

Is it still home sweet home care? - financing home care

Business & Health, Jan, 1993 by Kim Anderson

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