How ‘Care at Home’ ecosystems can reshape the way health systems envision patient care (2024)

(7 pages)

As eager as Americans may be to leave their homes after close to two years of the COVID-19 pandemic, one prevailing sentiment has become clear: when it comes to healthcare, many consumers would prefer options that allow them to remain out of a hospital or facility.

To meet that demand, healthcare systems are reenvisioning how Care at Home ecosystems may evolve. Even before the pandemic, Care at Home was one of the fastest-growing provider growth segments because of favorable demographic and regulatory trends.1Steven Landers et al., “The future of home health care: A strategic framework for optimizing value,” Home Health Care Management & Practice, 2016, Volume 28, Number 4. As we noted in “From facility to home: How healthcare could shift by 2025,” there is an estimated $265 billion worth of care services (representing up to 25 percent of the total cost of care) for Medicare fee-for-service and Medicare Advantage (MA) beneficiaries that could shift from traditional facilities to the home by 2025.2Oleg Bestsennyy, Michelle Chmielewski, Anne Koffel, and Amit Shah, “From facility to home: How healthcare could shift by 2025.” This partially reflects the additional 80 million Medicare beneficiaries who are expected by 2030. For more, see “The next generation of Medicare beneficiaries,” MedPAC, June 2015. In addition to consumer preferences for receiving home-based rather than facility-based care, research indicates that Care at Home has the potential to unlock higher-quality care for consumers at a lower cost for health systems.3Joanne Binette and Kerri Vasold, “2018 home and community preferences: A national survey of adults ages 18-plus,” AARP Research, August 2018; David M. Levine et al., “Hospital-level care at home for acutely ill adults: A randomized controlled trial,” Annals of Internal Medicine, 2020, Volume 172, Number 2. There are growing incentives across the healthcare industry to encourage that shift to cost-efficient and -effective care (for example, site-neutral payments and value-based contracting).4Nick Hut, “Site-neutral payments could reduce healthcare spending by at least $350 billion over 10 years, report finds,” Healthcare Financial Management Association, March 22, 2021. The Centers for Medicare & Medicaid Services’ (CMS) recent regulatory changes also are expected to further accelerate this transition to Care at Home and community-based settings.5“CMS finalizes calendar year 2021 payment and policy changes for home health agencies and calendar year 2021 home infusion therapy benefit,” US Centers for Medicare & Medicaid Services, October 29, 2020.

Health systems may start by defining the components that make up healthcare services in the home and by examining market forces expected to shape these segments. They can then examine critical questions to help shape their Care at Home strategy and to determine where to focus their energy.

The components of a Care at Home ecosystem

The Care at Home landscape can be segmented across two dimensions:

  1. Where does Care at Home take place in the patient’s care journey? Examples include preventive care and maintenance care, acute care, and post-acute care.
  2. Which patient populations is the service supporting? Examples include episodic patients, patients with chronic conditions, and/or patients with complex conditions.

By mapping the different sites and modalities of care that specific patient populations might encounter throughout their care journey (Exhibit 1), health systems can begin to define the broader ecosystem of care—one that extends beyond the hospital and other facility-based settings and into the home—that they will need to achieve the best quality, outcomes, and experience for their patients.

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How ‘Care at Home’ ecosystems can reshape the way health systems envision patient care (1)

An end-to-end view of these ecosystems of care also enables health systems to identify gaps in their current footprint and helps inform their strategy for assembling the required components of the ecosystem of care. This strategy may focus on building, buying, or partnering for Care at Home services.

While our research has found that the traditional post-acute home-health segment remains the largest, new emerging home-care subsegments—such as home infusions, home-based dialysis, primary home care, and hospital home care—are growing rapidly (Exhibit 2).

For health-system leaders, the size and growth of a Care at Home subsegment is only one of several factors to consider when developing their strategy. Although the economics of some subsegments may point to a case for a strong stand-alone business, health systems may be able to maximize value creation by stitching various subsegments into a comprehensive ecosystem of care across the patient journey.

Strategic questions to answer

As health systems embark on defining their Care at Home strategy, they can address several strategic questions early on in the process:

  1. Subsegment focus: Which Care at Home subsegments and patient populations would the health system need to focus on initially? As health systems begin this journey, they will have to be intentional about competing in those Care at Home subsegments that align with their strategic objectives and growth aspirations. As outlined in this article, Care at Home subsegments have varying capacities for growth and are at different stages of maturity. In addition, a health system’s choice of patient population to target for Care at Home may have implications for the sources of value it intends to unlock and the design of its care model. This includes the ability to reduce the cost of care through value-based care and population health arrangements. For instance, the means and capabilities required to prevent disease progression or exacerbation will vary according to whether the target population is healthy, has stable and treatable chronic conditions, or is relatively frail and in advanced stages of illness. Across complex and multiple chronic-condition groups, a risk-based Care at Home model also can incentivize the incorporation of behavioral healthcare across all stages of the care journey, from preventive to post-acute care. The specific care journeys that health systems prioritize for their Care at Home strategy can also help determine their strategic posture toward institutional settings of post-acute and long-term care.
  2. Mission alignment: How will the Care at Home strategy enhance the health-system objective of delivering more patient-centric and equitable care, including addressing previously unmet needs, such as social determinants of health, behavioral health, and wellness? Home- and community-based personal-care services such as in-home meal service, transportation, and wellness programs have the ability to address the nonclinical determinants of health. Overall health and these determinants are often correlated: those who are food insecure, for example, are more than twice as likely as people with no unmet social needs to report poor physical or mental health and to make multiple visits to the emergency room. As flexibilities for special supplemental benefits for the chronically ill (SSBCI) increase, we have noted that MA plans that offer these benefits can create “a chance to drive performance on cost management and improved health outcomes.” To the extent that these social determinants of health are also at the root of health disparities and inequities, Care at Home may have the potential to improve health equity and care outcomes.

    However, emerging models of Care at Home may risk exacerbating health inequities if they do not account for the myriad disparities that could inhibit access. As discussed in our rural community report, the adoption of virtual care in rural areas continues to lag behind urban areas, in part because rural residents are eight times more likely to lack access to broadband at home. This may exclude them from receiving home health services that rely on telehealth or remote monitoring. Moreover, the well-intentioned desire to shift care delivery into patients’ homes presupposes a level of housing stability that continues to elude at least 17 percent of US households.6Severe Housing Problems Database, America’s Health Rankings, 2021. These individuals face housing problems such as overcrowding, high costs, lack of kitchen facilities, or lack of plumbing facilities.7Severe Housing Problems Database, America’s Health Rankings, 2021.

    If health systems hope to be welcomed into their patients’ homes, they may need to embed a heightened awareness of patients’ needs, preferences, and living circ*mstances in the design of at-home services and interventions. This heightened patient-centricity could well become a substantial differentiator not only in the area of patient experience but also in patient adherence and outcomes (for example, use of culturally and linguistically competent caregivers and medically tailored meals reflective of patients’ cultural preferences).

  3. Strategic alignment: How should Care at Home align with the broader health-system strategy? As health systems develop their strategy for Care at Home, they will need to consider several interdependencies with their overall enterprise strategy. For example, while health systems may wish to rapidly shift care delivery to the home setting and unlock lower-cost, higher-quality, and more effective care, they may need time to set up the risk-based arrangements and financial incentives that make this shift value accretive. As such, health systems can evaluate the decision to offer in-home services in the context of their overall trajectory to risk-based payment. They may consider a glide path that manages the tension between the incentives of different payment models in which they participate. These evaluations may vary according to the features of health systems’ specific markets and regions, such as demographics, payer market dynamics, and their existing footprint of brick-and-mortar sites of care. Additionally, since institutional sites of long-term, post-acute care will continue to be required to serve patient needs that cannot be satisfied in the home, health systems that do not own a facility-based post-acute footprint will likely need to decide whether to codevelop their strategy with their post-acute provider partnerships, or whether to develop Care at Home independently of their post-acute strategy.
  4. Capability and operating-model requirements: What new capabilities and operating-model changes may be needed to pursue the Care at Home opportunity? Pursuing the Care at Home opportunity will present unique operational challenges, especially for providers whose operating models have been designed and optimized for care delivery in institutional settings. For example, the delivery of Care at Home presents additional hurdles associated with clinical requirements (for example, ensuring patient adherence via remote monitoring and the ability to ensure a sterile environment for the patient) as well as technological requirements (for example, networks to support reliable data transmissions and Internet of Things capabilities). Also, delivering Care at Home introduces specific workforce considerations (for example, geographically dispersed, contingent workforce, with historically high turnover, and state-specific laws that permit collective bargaining of home-care workers) different from those of care delivered in institutional settings. Efforts to overcome the chronic shortage of home-health and personal-care aides8“Occupational outlook handbook: Home health and personal care aides,” US Bureau of Labor Statistics, September 2021.—demand for which is expected to grow 33 percent over the next decade—could include reskilling programs that offer workers advancement into more specialized, better-paid caregiving positions or partnerships with institutions of tertiary education to train and educate the next generation of home caregivers. Given these different operating requirements, health systems will likely need to consider whether Care at Home should be delivered through their existing operating service-line model, or whether it will be more successfully operated by a dedicated division.
  5. Growth aspiration: Should the Care at Home strategy be focused primarily on optimizing the care continuum in existing markets or on a platform for expanding geographically? Health systems are often constrained in their long-term growth outlook by the demographic growth of their existing markets. Moreover, although hospitals continue to represent the majority of EBITDA in healthcare-provider profit pools, health systems that pursue diversified models of growth that encompass a greater range of care-delivery assets tend to generate superior outcomes to those that are acute-focused. As a vector of nonacute growth, Care at Home offers a platform for health systems to codevelop a new offering in their existing markets, with the possibility to then scale it nationally with greater capital efficiency. However, given that the pursuit of national scale will likely require both significant capital and operating experience in Care at Home that are otherwise not easily accessible, strategic partnerships can serve as an important unlock in accelerating the progress of health systems’ growth aspirations in Care at Home, both within and beyond their current markets.
  6. Partnership considerations: Which parts of the Care at Home value chain could be developed internally and which through a strategic partnership? As described in “The next wave of healthcare innovation: The evolution of ecosystems,” there is an increasingly diverse and fragmented care-delivery ecosystem, which affects Care at Home. As these options proliferate, an unmet need exists to organize these activities through building new businesses, acquiring capabilities, or partnering with other service providers. This initiative may, in itself, require a brand-new set of capabilities for health systems, including the ability to partner with players from other healthcare segments. As large national payers ramp up their investments in both home-health start-ups and large providers of in-home care, and private-equity and venture capital investors increasingly fund innovation in Care at Home models and enablers, health systems could leapfrog others by pursuing a programmatic strategy of seeking capital and operating partners to help accelerate their Care at Home agendas.9Joyce Famakinwa, “Private equity likely to deploy $1.5 trillion war chest in home-based care market,” Home Health News, February 18, 2020.

The COVID-19 pandemic has underscored the potential for improved care quality, clinical outcomes, and superior patient experience. Care at Home is evolving as an indispensable component of health systems’ efforts to position themselves for success now and in the future.

Dalglish Chew is an associate partner in McKinsey’s Bay Area office, where Aneesh Krishna and Nithya Vinjamoori are partners; and Michael Morley is an associate partner in the Pittsburgh office.

The authors wish to thank Mathangi Radha for her contributions to this article.

These materials do not constitute legal, medical, policy, or other regulated advice and do not contain all the information needed to determine a future course of action. This report and its findings are meant to be an analysis of trends seen in pre-acute, acute, and post-acute care and are not meant to reflect or imply preference of any particular model. While Care at Home is one growing option in pre-acute, acute, and post-acute care, care delivered in facilities will continue to have value and may be the right choice for individuals and their families.

This article was edited by Elizabeth Newman, an executive editor in the Chicago office.

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How ‘Care at Home’ ecosystems can reshape the way health systems envision patient care (2024)

FAQs

How is technology transforming healthcare at home? ›

Mobile applications can help individuals with medication reminders, fitness tracking, dietary management and mental health support. Smart home technology, such as voice-activated assistants and automated lighting, can be adapted to assist the elderly, enhancing their safety and independence at home.

What is the healthcare ecosystem? ›

The healthcare ecosystem is a complex network of all the participants within the healthcare sector. It is a community that consists of patients, doctors, and all the satellite figures who play a role in the medical care received by the patient or their hospital stay.

How can care be improved? ›

Best practices for delivering quality patient care
  1. Show respect. ...
  2. Express gratitude. ...
  3. Enable access to care. ...
  4. Involve patients' family members and friends. ...
  5. Coordinate patient care with other providers. ...
  6. Provide emotional support. ...
  7. Engage patients in their care plan. ...
  8. Address your patients' physical needs.
Mar 6, 2020

In what ways has technology changed the way healthcare systems operate? ›

Digital innovation is transforming healthcare in several meaningful ways. New technologies are increasing access to medical services, enhancing patient experiences, reducing costs, improving decision-making accuracy, accelerating information sharing, and advancing public health research.

How technology has shaped healthcare? ›

Faster communication systems have also had a positive impact on medical records. More hospitals and private practices are making the switch from paper to electronic medical records. This has simplified the filing process and made it easier for patients to switch from one provider to another.

What is the ecosystem approach to health? ›

The Ecohealth approach is anthropocentric — managing the ecosystem revolves around seeking the optimal balance for human health and well-being, rather than simply on environ- mental protection.

What is the role of the ecosystem in human health? ›

Many of the most significant human-induced changes to ecosystems have been essential to meet growing needs for food and water. These changes have helped to reduce the proportion of malnourished people and improve human health. inequities and disparities across groups of people.

What makes a health ecosystem? ›

A healthy and diverse ecosystem is one that provides abundant and beneficial services to its constituents, such as food, water, shelter, economic livelihood, recreation, and natural beauty.

How can the healthcare system be improved? ›

Consider the following five evidence-based approaches to improving access to health care.
  1. Expand Insurance to Cover Health Care Costs. ...
  2. Extend Telehealth Services. ...
  3. Invest in Mobile Clinics. ...
  4. Educate the Public About Multiple Health Care Sites. ...
  5. Improve Cultural Responsiveness.
Nov 17, 2023

How can healthcare efficiency be improved? ›

Communication and training are the key aspects of improving staff productivity. Equipping your team with the knowledge needed to complete their jobs as efficiently and effectively as possible can result in streamlined day-to-day efforts.

What are the factors affecting the healthcare system? ›

Ideally, need is the major determinant of health-care utilization, but other factors clearly have an impact. They include poverty and its correlates, geographic area of residence, race and ethnicity, sex, age, language spoken, and disability status.

How could technology help improve your own health? ›

Medical and Mental Health Access with Telehealth Apps. Perhaps the most important use of health and wellness technology is telehealth apps like TimelyCare. TimelyCare is a platform designed to provide instant access to mental and physical healthcare 24/7/365, all within the comfort of the users' own home.

How will healthcare be transformed by technology in the future? ›

The ongoing evolution of technology in healthcare, spanning AI, VR/AR, 3D-printing, and robotics, is reshaping the landscape of medicine, offering a glimpse into a future where healthcare is characterized by enhanced efficiency, personalization, and accessibility.

How does technology improve efficiency in healthcare? ›

AI enhances healthcare efficiency through automation and data analysis. By automating tedious tasks such as record-keeping and management, AI frees up personnel to perform more important work while also minimizing the impact of human error.

How technology change peoples health? ›

Being overly connected can cause psychological issues such as distraction, narcissism, expectation of instant gratification, and even depression. Beside affecting users' mental health, use of technology can also have negative repercussions on physical health causing vision problems, hearing loss, and neck strain.

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