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Providing age-friendly care is not only good for patients, but can also benefit an organization's bottom line.
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What Age-Friendly Care Means for the Bottom Line

By Victor Tabbush | Wednesday, April 3, 2019

Photo by Alexander Stein | Pixabay

An age-friendly health system provides safe, high-quality care that lines up with what matters most to an older adult. In the following interview, Victor Tabbush, PhD, Adjunct Professor Emeritus, UCLA Anderson School of Management and faculty for IHI’s Age-Friendly Health Systems initiative, explains how providing age-friendly care is good for patients and the bottom line.

What does it mean to have a business case for age-friendly care?

Age-friendly health systems deliver worth to the individuals that the system serves. It’s what I would call intrinsic value — improved health outcomes and improved quality of life. 

But having a business case [for age-friendly care] means the financial returns generated from that investment justifies the deployment of resources. There is no one business case for age-friendly health systems because there are many different factors that shape the business case. [The business case] is going to be dependent upon the population that is served and the site in which the age-friendly health care is delivered. Will it be in the home? In an outpatient setting? Or is it going to be in the hospital? What is the payment mechanism under which the health system is operating?

An age-friendly health system has the potential — which has been demonstrated in many instances — to deliver what I would call instrumental value or financial benefits to the organizations that deploys the system.

How would you describe those potential financial benefits?

One would be looking for the positive financial consequences to accrue in either or both of the following areas: 1) cost avoidance — that is, reducing the costs of medical utilization which are reactive, unwanted, and unnecessary; and 2) the generation of revenues that may stem from the introduction of an age-friendly health system.

An age-friendly investment that can enhance the bottom line includes the annual wellness visit. When done in an age-friendly health way, these have the potential to generate significant revenues, while at the same time, preventing utilization in the acute care setting.

Another example would be the Medicare Shared Savings Program, which is one of the new value-based health care programs. These programs provide the incentive for health systems to reduce the total cost of care. Systems that do this successfully will receive some of the cost savings.

Which organizations that provide age-friendly care have seen positive financial returns?

There are many instances I’ve seen. Providence System in Portland, Oregon, offers an enhanced outpatient program called Elders at Home for high-risk elders. Nurses periodically check on [program participants] and are on-call for what would otherwise result in visits to the emergency room. 

In the first 15 months of the operation this program, they saved $2 million by virtue of reductions in readmissions, admissions, skilled nursing stays, and also some reductions in the expenses of oncology drugs.

Another age-friendly system is offered in the inpatient setting. It’s called Elder 70 Plus. It involves hydration, mobility, and ensuring that individuals in the acute care for the elderly ward get enough sleep because sleep deprivation can trigger a case of delirium.

In addition to what it does to the individual, hospital-acquired delirium is very expensive. It adds significantly to the length of stay and to the acuity of each day that the person spends in the hospital. So, by reducing the number of cases of delirium, the system has significantly reduced the expense of the length of stay. As a result, I’ve calculated an 87 percent return on their investment in that program.

What do clinical leaders need to know about communicating with their finance colleagues?

They must recognize that there are other stakeholders — in particular, those that tend to the financial resources — who they must successfully appeal to so needed resources are forthcoming. Sometimes clinical leaders need help to understand not only what influences the bottom line, but also the relative strengths of these factors. Certain factors may be relatively trivial. Other factors may be very significant. It’s important to not only understand the multiple factors that shape the return on investment, but also which are the most important factors to target.

Delirium, for example, can be a major factor, but you need to understand it [in context]. If we look, for example, at an inpatient setting where there’s no incidence or a very small incidence of delirium, then an age-friendly health system that addresses delirium is not going to have much of an effect. The higher the incidence of hospital-acquired delirium, the greater will be the return on investment from efforts to prevent it. This, of course, assumes the effectiveness of the age-friendly health system in preventing and managing the cases of delirium.

Delirium places a heavy financial burden on a health system. It’s very difficult to administer a medical regimen to an individual in a delirious state. A case of delirium may require a longer length of stay. During that stay, the individual is going to require more oversight, more caregiving, and more intensive nursing. The outcomes are going to be delayed and may not even be forthcoming. So, the length of stay is extended and the cost per day is extended. 

Helping health care leaders understand these issues is not difficult. They’re astute individuals who are motivated to understand the business case because they know they may need to overcome skepticism about whether the changes necessary to create an age-friendly health system are going to be financially worthwhile. Health care leaders are also wonderful advocates for their patients and for the intrinsic value that an age-friendly system provides.

Editor’s note: This interview has been edited for length and clarity.

(Having difficulty watching this video? Watch on YouTube.)

  • Read The Business Case for Becoming an Age-Friendly Health System. This report outlines steps for making the business case for improving care for older adults and includes two case studies.
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