Why home care costs too much – Paul Osterman

MIT Sloan Prof. Paul Osterman

MIT Sloan Prof. Paul Osterman

From the Wall Street Journal

As baby boomers age into long-term care facilities, Medicaid costs will go through the roof. Americans already spend – counting both public and private money – more than $310 billion a year on long-term support services, excluding medical care, for the elderly and the disabled. Medicaid accounts for about 50% of that, according to a 2015 report from the Kaiser Commission on Medicaid and the Uninsured. Other public programs cover an additional 20%.

Yet in another decade or so these figures may look small. In 2015 around 14 million Americans needed long-term care. That number is expected to hit 22 million by 2030. There’s an urgent need to find ways of providing good long-term care at a lower cost. One fix would be to deregulate important aspects of home care.

There are two million home health aides in the U.S. They spend more time with the elderly and disabled than anyone else, and their skills are essential to their clients’ quality of life. Yet these aides are poorly trained, and their national median wage is only a smidgen more than $10 an hour.

The reason? State regulations – in particular, Nurse Practice Acts – require registered nurses to perform even routine home-care tasks like administering eyedrops. That duty might not require a nursing degree, but defenders of the current system say aides lack the proper training. “What if they put in the cat’s eyedrops instead?’ a healthcare consultant asked me. In another conversation, the CEO of a managed-care insurance company wrote off home-care aides as “minimum wage people.”

But aides could do more. With less regulation and better training, they could become as integral to healthcare teams as doctors and nurses. That could improve the quality of care while saving buckets of money for everyone involved.

Take hospital readmissions. When elderly people leave the hospital after an acute incident, they often end up readmitted for another costly stay within 30 days. Or they’re sent not home but to an expensive long-term care facility. Home-care aides can improve such transitions. A recent trial program at New York University Hospital found that when aides were trained to work with heart patients upon discharge, the patients were significantly better at maintaining their health.

Aides could act as health coaches, working on diet and exercise with people suffering from chronic conditions such as diabetes. They could facilitate communication between doctors and nurses, reporting on changes in the patient’s condition. Today’s rules don’t explicitly bar them from these tasks, but the regulations that treat aides as mere drudge workers prevent them from expanding to fill this natural role.

Read the full post at the Wall Street Journal.

Paul Osterman is the Nanyang Technological University (NTU) Professor of Human Resources and Management at the MIT Sloan School of Management as well as a member of the Department of Urban Planning at MIT.

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