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Should chronically ill patients be treated in the hospital setting?

Posted Mar 18 2010 8:59am

Over the course of the past decade, there has been a trend to move more and  more treatment of chronically ill individuals outside the hospital and into ambulatory care.  There is good reason for this. Ambulatory care is much less expensive than hospital care.  In fact, the goal of treating patients more regularly in the ambulatory care setting is to reduce the probability that they need care in the inpatient setting.

However, Siu et al. (2009) claim that hospital do form an important link in the chronic care chain of treatment.  Their most compelling argument is that even under the best ambulatory care, some patients with chronic diseases will inevitably need to visit a hospital.  Thus, providing the highest quality care and integrating acute care with preceeding and following non-acute care is imperative.

However, is there a business case for hospitals to treat these chronically ill patients?  Siu and co-authors argue that the answer is yes.  How hospitals could improve chronic care treatment and improve their bottom line include the examples from the following three settings:

  • Pre-hospital: In the hospital at home program, the goal is to provide more intensive medical services at home to prevent hospitalization.  Providing care in this setting can reduce complications and iatrogenic injuries and also eliminate/improve transitions to the hospital.  The hospital can make money by reducing low- or negative-margin Medicare admissions and increase the bed capacity available for high margin admissions.  Also, the hospital can make money on the billable services provided at home.
  • Hospital: In examples such as the Hospital Elder Life Program ( HELP ), the goal is to move patients through the acute hospital admissions process safely and efficiently.  This hospital can increase profits through reducing the length-of-stay needed and the cost per day as well as reduce ED crowding.
  • Post-hospital: Transition programs can help patients smoothly move out of inpatient care.  This should reduce the need for readmissions. If Medicare stops paying for unnecessary re-admissions, than smoothly moving people out of inpatient care and decreasing readmission rate will improve the hospital’s bottom line.

The article recommendations in essence seek more integrated care between the acute and non-acute treatment settings.  In the three examples above, the hospital is expanding its reach to include more ambulatory care.  Some of the business case made above depends on reforming Medicare’s payment methods however, (e.g., reduced or no reimbursement for hospital readmissions).  Even if these changes are made, however, Siu and co-authors recognize that implementing these changes will not be easy.  For instance, even if these hospital programs reduce readmission rates, decrease the number of iatrogenic injuries, and decrease overall medical costs, “these savings, however, may accrue to other cost centers (for example, if length-of-stay or intensive care unit use is reduced) or to a separate entity (such as an insurer) rather than to the entity paying for the model…Even for programs that operate entirely within the hospital, crossing departmental and cost-center lines makes funding difficult, given the silo-based budgets and norms for recognizing revenue.  Further, Medicare Part B does a poor job of proving funding for care based on interdisciplinary teams.”

This article does provide some areas for further integration and improved care for patients in the chronic care setting.  However, an integrated hospital system would seem to be able to overcome many of these issues.  For instance, an organization like Kaiser Permanente could more easily allocate chronic medical care across the inpatient and outpatient settings in the most efficient manner, worrying less about which setting the cost accrues.  A more integrated health insurance model would still have to worry about these issues, but further vertical integration seems like a more sustainable business model in the long-run than the business policies laid out by Siu and co-authors.

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