Virtual care at home saves money, but payer reform needed

New research shows that a virtual, at-home acute care model at a public hospital in Los Angeles was linked to hospital and payer savings; however, payer mix was the principal factor of hospital cost-savings or losses, indicating the need for payer reform.

The study published in JAMA Network Open aimed to assess the costs and savings associated with the Safer@Home program at the Los Angeles General Medical Center. The hospital launched the program in September 2022, offering hospital-level care at home through remote patient monitoring and virtual check-ins to acutely ill patients.

Researchers from the Los Angeles General Medical Center and the University of California, San Francisco School of Medicine conducted a retrospective, economic evaluation of the program. They analyzed data for 876 patients who received at-home care through the program between Sept. 1, 2022, and Aug. 31, 2023. They compared the data with that of 1,590 matched control patients.

The researchers estimated that the total fixed costs for the program over one year were $682,547, including $164,547 in durable medical equipment (DME) costs and $518,000 in annual salary and employee benefits for the program's staff.

They found that the Safer@Home model enabled net hospital savings of $5.6 million for the patients enrolled in the program, calculated as variable costs saved minus revenue lost.

The overall savings were largely attributable to Medicaid and self-pay patients. When comparing cost savings with revenue lost and fixed costs of the program, the researchers found that the hospital saved a net average of $8,380 per Medi-Cal and $10,934 per self-pay patient. However, they lost $4,143 and $25,999 per Medicare and commercially insured patient, respectively. 

The researchers also modeled the financial impact of the program for a more standard payer mix, as Los Angeles General Medical Center mostly sees Medicaid and uninsured patients. With a more typical payer mix and LA General's daily variable hospitalization costs, enrolling 1,000 patients in the Safer@Home program without reimbursement for operating the program would have resulted in a net hospital loss of $11.22 million.

Still, even absent reimbursement, the program saved costs for payers in all modeled scenarios.

Thus, researchers noted that to make the program cost-feasible for hospitals with a typical payer mix, some reimbursement would need to be available. They estimated that creating reimbursement rates of 50% to 60% of hospital costs would enable the program to be cost-saving to both the hospital and payers, across payer mixes. 

The study adds to our understanding of the Safer@Home care model. Prior research has shown that patients who received care through the model had shorter hospital stays than patients who received standard inpatient hospital care.

For the study published last December, researchers evaluated outcomes for 876 Safer@Home patients and compared them with data for 1,590 matched controls. They found that Safer@Home patients had a significantly shorter overall mean length of stay (1.3 days) compared with matched control patients (5.3 days). Additionally, the Safer@Home cohort had a significantly lower mean rate of return emergency department visits per person than control patients during follow-up.

Anuja Vaidya has covered the healthcare industry since 2012. She currently covers the virtual healthcare landscape, including telehealth, remote patient monitoring and digital therapeutics.