Why healthcare should reimagine the home as the care setting of the future
The movement to deliver care in the lowest cost, medically appropriate care setting has fueled rapid growth in sectors of the healthcare industry that facilitate care at home. What many have learned from this redrawing of the care pathway is that delivering care at home can result in comparable or improved outcomes compared to institutional care, with outsized improvements in both cost and patient satisfaction.
“Home health care is usually less expensive, more convenient, and just as effective as care you get in a hospital or skilled nursing facility (SNF).”
There are many reasons healthcare at home is just as effective as institutional care: a mobile workforce of skilled caregivers, advanced telehealth and remote caregiving technology supporting the caregivers, and happy patients receiving care where they most prefer to be. The primary reason that care at home is less expensive than institutional care is also its greatest opportunity: it’s an otherwise idle healthcare asset. The home can be furnished with the same caregivers, technology, and capabilities as specialized healthcare settings without the added cost of a separate, dedicated setting.
Much like sharing economy innovators Airbnb and Uber have leveraged technology to extract value from assets that would otherwise be sitting idle, mobile health technology is transforming everything from our watches to our workplaces to our homes into productive healthcare assets. Our homes have the unique opportunity to “disrupt” our entire healthcare system provided that they can accommodate an increasing level of caregiving and technology within. If they can, homes will necessarily become the healthcare settings of the future.
The Home’s Potential to Disrupt Healthcare
The term “disruption” gets widely invoked these days when any upstart company shakes up a market traditionally controlled by longstanding incumbents. The key to the principle of disruptive innovation however, according to the guys who coined it, is the transcendence from mere disruption to a sustainable innovation.
Our advanced healthcare institutions and their services exist to accommodate the most intensive needs of their most medically complex (sickest) customers. However, because the number of these customers is small, the cost of maintaining those resources must be spread across all customers. In other words, the majority of dollars spent on providing healthcare are invested in very expensive people, places, and tools that most of us seldom utilize but pay to maintain nonetheless. The commonly quoted figure from the Kaiser Family Foundation is that 51% of total national healthcare expenditure is spent on the sickest 5% of the population.
By prioritizing the needs of their few most medically complex customers, traditional healthcare institutions have left the door open to competitors who are able to offer a substitute product for less demanding customers at a lower cost. Healthcare innovators are capitalizing on this opportunity by offering a basic healthcare product at a low price (e.g. Minute Clinic at CVS), and then gradually moving upmarket to capture all of the market share that the incumbent provider leaves available to them (freestanding emergency departments). A more visible example is the evolution of Lexus versus Mercedes, which is the brand Lexus was designed to compete with head-to-head. The flagship Lexus LS sedan was half the price of the comparable Mercedes when it was introduced in 1989… today Lexus controls approximately the same percentage of the US luxury car market as Mercedes.
This is the “disruptive innovation” scenario, as originally defined by Joseph Bower and Clayton Christensen, which describes how tomorrow’s homes will capture increasing market share from our institution-based healthcare system. While care provided in the home today is largely a less expensive substitute for lower acuity post-acute and long-term care, the migration of care to the home will ultimately extend farther up the acuity spectrum. One Johns Hopkins study determined that 1/3 of seniors admitted to their hospital could have been treated just as effectively at home with fewer complications, lower rates of hospital-acquired infection, higher patient satisfaction, and at a cost savings exceeding 20%.
“The hospital as we know it will be on its way out.”
-World Economic Forum, 8 Predictions for the World in 2030
By incorporating healthcare functionality as an amenity for their customers, innovative housing providers will capitalize on their tremendous cost advantage over institutional care and position themselves as the healthcare setting of the future.
The Future of Care at Home
The healthcare industry’s response to the potential of in-home care can be seen in moves like Humana’s purchase of a 40% stake in Kindred Healthcare’s home healthcare business, CVS’ purchase of Aetna, and Walmart’s talks of a merger with Humana. Vertical integration of payors, providers, and retailers of consumer goods lets us know where those payors think the best value for their dollar will be in the future. Federal payors are getting on-board as well. Healthcare services delivered in the home and community now comprise the majority of all Medicaid long-term care spending, and home healthcare will be the fastest-growing category of Medicare spending by 2020.
This makes sense when you consider that three times as many seniors get professional healthcare and supportive services at home as receive care in institutions like nursing homes and assisted living facilities. Another 20 million seniors receive some form of long-term care at home from unpaid providers like friends and family, and four million seniors live in the same home with family members who provide care. As the number of individuals requiring long-term care more than doubles to 60 million by 2050, the home will increasingly be forced to do double duty as a care setting.
Several healthcare industry verticals that support care at home are already experiencing tremendous increases in market share, but rapid growth comes with growing pains. Over the next five years the home healthcare industry is projected to have the highest compound annual growth rate of any industry individually tracked by the US Bureau of Labor and Statistics, but it is challenged by a shortage of care providers (a deficit of 335,000 by 2040 according to MIT). The remote patient monitoring sector is expected to reach over 36 million patients by 2020 as in-home care providers increasingly turn to technology to leverage their limited human workforce, but more than half of providers acknowledge that they are underinvesting in the technologies they will need to keep up with demand.
Professional at-home caregivers and aging-in-place technology providers alike acknowledge that their ability to operate effectively and scale efficiently is hindered by the variability and dangers of the home environments they operate in. Twelve million seniors are living alone in a home that is unmanageable and unsafe, and 90% of them reside in a different city than their nearest child. The all-too-frequent response to a family’s concerns about their loved one’s safety at home is a move to institutional care close by.
“The Medicaid system currently steers people toward nursing home care. Far more people can be covered in [home] care programs for significantly less.”
-Ed Rendell, Former Governor of Pennsylvania
Scaling limitations of the essential elements of in-home care, caregivers and technology, create an opportunity for another player to step up and fill the gap: the home. A specialized housing environment that employs care tools like telehealth support, fall prevention technologies, ambient ADL assistance, remote monitoring and virtual caregiving, and advanced remote diagnostics can facilitate an industry-wide move to accommodate more and higher acuity care at home.
Reinventing the Home as a Healthcare Environment
While long-term care institutions like assisted living facilities are striving to integrate additional healthcare capabilities into their housing offerings, fewer than ten percent of seniors receive long-term care in institutional settings. As the entire healthcare industry pivots to person-centered care, the next advancement in care delivery is to bring institutional capabilities to individuals where they want to be (and most already are): at home.
The traditional housing industry has attempted to accommodate escalating demand for healthcare accommodations at home on several fronts. An estimated $30 billion annually is spent on home modifications for healthcare, including everything from grab bars and wheelchair ramps to complete ADA-accessible renovations. Developers are also converting multifamily communities and single-room-occupancy buildings into informal “village” healthcare models and seniors-oriented co-housing.
Other innovators are recognizing the economic and quality of life advantages associated with family participation in care and creating homes that accommodate multigenerational living on the same lot. A 2016 poll by the Scan Foundation determined that family caregivers preferred to provide care in their own homes to any other location, and a separate study found that 44% of surveyed homebuyers are willing to house their parents in their homes. Lennar homes, the largest homebuilder in the United States by revenue, has an entire line of homes that include a separate but attached dwelling unit that is universally designed to accommodate both families and aging residents in multigenerational households. These NextGen homes have seen near 100% annual sales growth since their introduction in 2011.
Another innovation that delivers the advantages of family-supported care but with the added flexibility and independence of separate living spaces is the Temporary Healthcare Structure (THS). Temporary Healthcare Structures are standalone dwelling units that are placed at the home of a caregiver providing care for a family member. Occasionally deridingly called Granny Pods, THSs are much more than just a cute cottage for aging parents. They offer several benefits beyond the convenience and cost savings that come from having family next door.
The THS’s greatest economic advantage is in avoiding unnecessary institutionalization. Up to 100,000 seniors are unwillingly moved into expensive institutional care every year simply to ease the minds of family members. THSs are outfitted with features like activity and vital signs monitors, telehealth technologies that facilitate remote diagnostics and care coordination, and ambient ADL supports that reduce caregiver load around activities like bathing, scheduling and medication management. This technology promotes the independence of the resident while keeping families and caregivers continually updated with actionable health information that reduces unnecessary worry.
“Sick people, particularly those with serious conditions, greatly prefer the company of their friends and family to residence in a hospital or nursing home.”
-David Mixner, Healthcare Activist
A second benefit unique to Temporary Healthcare Structures is their ability to rapidly deploy almost anywhere. A frequent topic of discussion around addressing the social determinants of health is access to care and the “care deserts” in rural areas of our country. As rural healthcare providers struggle to survive, the 16% of our country that is 30 miles or more from institutional healthcare needs a care solution that is both economical and flexible. THSs leverage the close family networks that commonly exist in rural areas and deliver the advanced monitoring and diagnostic tools that are lacking. As the cost of care interventions increases with distance, the value of accurate predictive analytics leading to effective care interventions is multiplied many times.
Perhaps more important than improving access and affordability, another extraordinary benefit of Temporary Healthcare Structures is the demonstrated health benefits of the self-reliance they foster in residents. By allowing residents to maintain for a while longer the independent lifestyle they prefer, the residents don’t exhibit the mental and physical degradation that too commonly occurs with institutional care. Proximity to family is also demonstrated to have a profound positive effect on health outcomes. Older adults who have frequent contact with family have markedly lower rates of unnecessary institutionalization and hospital admission, and post-acute patients discharged to a home where they live alone have a 50% higher 90-day readmission rate than patients who live with family. Residents in THSs do not suffer from the same levels of institution-acquired infections, insomnia, malnourishment and dementia associated with institutional care. 90% of older adults prefer a home-like setting to institutional care, and THSs give them the social and technological support they need to live where they want and enjoy improved heath at the same time.
Recognizing that facilitating person-centered care in low-cost settings is good for patients, families and payors like state-funded Medicaid waiver programs, five states have passed laws that compel cities and local jurisdictions to allow Temporary Healthcare Structures and to expedite approval of compliant permit applications. As the healthcare capabilities of THSs are demonstrated and the regulations surrounding the use of THS are streamlined, expect more states to follow suit. Providers who manage Bundled Payment for Care Improvement programs will also look to THSs as part of a post-acute network solution to move patients to home without the need for intermediate care. Much like ambulatory surgery and home healthcare before them, THSs will be a disruptive innovation that ultimately proves itself as the accepted setting for much of the care that occurs in institutional settings today. The future of sustainable person-centered healthcare depends on it.