Medicine is moving farther from its fee-for-service roots and closer to more individualized, value-based care—a phenomenon that could benefit a growing number of home-based care programs, according to data presented at MedAxiom’s CV Transforum in Dana Point, Calif.
At the annual fall meeting, Richard Rakowski, co-founder and CEO of a Boston-based “virtual hospital” system known as Medically Home, underscored both the clinical and economic benefits of transitioning to a home-based system for chronically ill patients. He said fixed costs are the number-one issue in healthcare today, noting that the U.S. spends as much on brick-and-mortar hospitals each year as it allocates for its entire defense budget of $800 billion.
“It’s just a stunning number,” Rakowski said. “Strategically, we’re borrowing money every year and we’re funding the brick-and-mortar hospitals and creating strategic challenges for the country.”
Rakowski didn’t go to medical school, but personal experience drew him to the field. While interviewing for a board position at a major academic medical center on the East Coast, his father, a 91-year-old Holocaust survivor of three concentration camps, was admitted to the hospital. Rakowski’s dad passed just three days after his index admission—the result of three medical errors Rakowski witnessed in real time.
When the CEO of the hospital, which Rakowski didn’t name, showed up at his father’s funeral, Rakowski requested a P&L statement from the hospital. The financial records revealed that 67% of the center’s expenses were fixed costs or overhead, meaning that just 33% of the hospital’s income was being funneled into care delivery.
“So if an average reimbursement for a patient in the hospital was, let’s say, $10,000 to $12,000, the vast majority of those costs pay for brick-and-mortar and a very small percentage actually goes to care,” Rakowski said. “Which is why we write patients out of the hospital. Which is why we discharge them to skilled nursing facilities. Which is why their care is never completed.
“This is why we get comfortable with the terms of transitions and handoffs when in fact the patient really, really should be in someone’s care until they’re completely recovered.”
Hospitals—especially big centers such as Massachusetts General or Brigham and Women’s—are on a mission to minimize the number of lower profitability patients they admit, Rakowski said. Well-regarded medical centers are often at full capacity, and when they’re faced with a choice, they’re likely going to admit a hip surgery or CABG patient over a chronic comorbid individual with CVD because those patients are just more profitable.
But Rakowski said the solution to this issue isn’t as simple as installing a new hospital wing to care for a greater number of patients. It wouldn’t make sense to build a giant shopping mall to rival Amazon’s success, he said, just like it doesn’t make sense to build new beds in a hospital wing when that’s not the direction care is headed in 2019.
Some hospitals are backing the idea, according to Rakowski—around 10% of centers in the U.S., mostly urban centers, would love to move care for their chronically ill patients to a safe, home-based setting. But other hospitals, fee-for-service “engines” who believe “value is coming,” predict that at some point between 2021 and 2025, 70% of payments to hospitals will be bundled and value-based. They aren’t being proactive, Rakowski said.
“No matter what they do, no matter how they try to coordinate care from the hospital, reduce length of stay, no matter what they do, the $800 billion is still the problem,” he said, nodding to the number he’d referenced earlier. “Unless we move the patients out of that $800 billion, there’s no possible way on earth to go full value. So what if there was some way for hospitals to, on their own...move to value and move patients to a new side of care called the home?”
Rakowski thinks of patients as consumers, and he thinks others should, too. Right now, patients are paying more than ever in copays and deductibles, making physicians “stewards” of their patients’ money. Every test, every procedure and every decision made by a doctor impacts the price of their patient’s care and determines how much they’ll need to shell out in copays and deductibles.
The idea of Medically Home is to circumvent those costs while delivering the best care possible. Rakowski’s model is simple: a patient is “admitted” to their own home, which is transitioned into a temporary hospital for 30 days. Two-way audio and visual communication between a hospital-based team of experts and the patient and their family allows physicians to avoid post-acute care, because at-home hospitalization is designed to stop an acute episode in its tracks.
If a patient needs a certain service, it can be dispatched to their home within an hour, Rakowski said. If they need a CT, MRI or other procedure that requires advanced and bulky tech, Medically Home arranges transportation.
“Think of Uber meets a hospital meets Amazon coming to the home,” Rakowski said.
To date, the model has helped patients avoid admissions and eliminated the need for skilled nursing facilities, Rakowski said. A clinical trial with Massachusetts General Hospital that involved stage 4 pancreatic cancer patients found the Medically Home model kept patients out of the hospital 8% more reliably than traditional approaches.
“I’m a big fan of what’s possible,” Rakowski said. “Cardiovascular care is at the heart of almost every patient we care for. You are at the center of everything, so you need a strategy to move from fee-for-service care.”