Once diagnosed, memory care patients present unique clinical and financial challenges to the health care industry. Health care costs skyrocket when someone is diagnosed with dementia. Additionally, those with Alzheimer’s and other types of dementia experience a myriad of health-related problems including cognitive impairment, behavioral issues, difficulty swallowing, immobility, falls, infections, and increased risk of death that require more interactions with the healthcare industry. More than 85% of people with Alzheimer's have one or more chronic conditions, again increasing health care costs for these patients.

The financial burden of the growing population of memory care patients will be felt across the healthcare landscape. Federal spending will continue to increase as the Baby Boomers age, because Medicare spends an average of $23,000 a year for a patient with symptomatic Alzheimer’s compared to about $7,000 for those without the disease. Advisory Board’s own estimates are that MA plan spending on memory care patients will increase by 50% over the course of the 2020s alone for the same reason, from roughly $7.5B in 2019 to $15B in 2030.

The increasing financial burden will not be borne by payers alone. Most of the care for memory care patients comes from informal caregivers rather than the healthcare system. Caregiving also creates or aggravates health problems for caregivers, because more than a quarter of dementia caregivers delay or neglect their own heath. This leads to increased healthcare costs due to caregiver burden.

Despite the growing demand for memory care and the significant cost of these patients, the healthcare industry has not invested much in this space outside of the search for drugs that can address the underlying causes of these illnesses. Even with the billions of dollars spent by the life sciences on the search for these treatments, however, it appears unlikely that there will be a breakthrough pharmacological ‘cure’ for memory care illnesses soon. In lieu of an effective medical intervention to slow the progression of these diseases, cross-stakeholder collaborations will remain the most powerful tools to address the social and financial difficulties associated with this population. As these financial and social difficulties grow with the aging population, they must be matched by an increasing openness to creative collaborations between senior care organizations. We flag a few of the most promising of these later in this work, but you can find a more thorough discussion of potential cross-stakeholder collaborations in memory care here.

The US healthcare system has struggled to develop effective and sustainable interventions for memory care patients because these illnesses pose particularly intractable medical and social challenges. These “hard truths” are often cited as the reasons why the healthcare industry cannot make progress. Our research found that there are opportunities to improve memory care, but it begins by acknowledging the current reality.

1. There is currently no cure for memory care illnesses, and one does not seem likely in the next 5-10 years

While there are many pharmaceutical treatments in development, most target the symptoms of Alzheimer’s and dementia rather than the root causes that would prevent cognitive decline. Most are unlikely to make it to market anytime soon—historically, Alzheimer’s drugs have had a 99% rate failure in human trials. Those that do make it to market will face increased scrutiny from payers who will look for real-world, post-market evidence of the treatments’ effectiveness before supporting them.

With no cure or long-term treatment currently available, the care pathway for dementias relies on behavioral interventions and lifestyle modifications. Not only are these interventions heavily caregiver-dependent, but they are neither cost-effective for the patient nor do they slow the progression of symptoms. This means that many patients are unable to implement these changes and end up in the hospital, which in turn accelerates their cognitive decline.

2. Informal caregivers and providers bear most of the financial burden of memory care

Most of the support provided to memory care patients falls on their informal care network due to the high cost of formal caregiving for these demanding patients combined with the relatively low reimbursement rates from CMS for inpatient and at-home dementia care. This makes dementia care heavily dependent on both paid and unpaid caregivers, but the numbers of both are declining relative to the growing population of older adults as birth rates decline and immigration slows.

Many older adults with advanced dementia eventually end up in an assisted living facility, a memory care center, or a state hospital. However, these facilities are also experiencing workforce shortages due to staff retention challenges and turnover that is quite high. Those that can retain staff continue to struggle with what they experience as insufficient levels of reimbursement relative to the time and effort required to support this high needs population.

For more on the senior care workforce, read our state of the post-acute workforce.

3. Effective memory care requires consistent behavioral health interventions

One of the most unique–and disturbing–experiences for those with dementia is the erosion of their sense of self. The symptoms that arise from that experience create changes in patient behavior that both they and their caregivers report to be one of the most challenging aspects of the disease.

As core aspects of the patient’s experience of themselves change, dementia patients may lose their sense of self-worth, feel depressed, or become withdrawn or agitated. Behavioral health interventions for patients and caregivers have proven to be highly effective at lowering the rate of hospitalization for patients and burnout among caregivers, but the cost of one-on-one behavioral health interactions is often financially burdensome for both and difficult to find.

4. There are cultural and financial barriers to early detection of dementias

Fear and stigma around Alzheimer’s and dementia stems mainly from a lack of understanding about the disease, though there are also underlying ageist beliefs surrounding memory loss. These cultural misapprehensions often prevent people from seeking medical support for their symptoms, which in turn leads to the general underdiagnosis of the overall dementia population. Plus, it can be an emotional burden for a dementia patient to know that they have the disease given the lack of a cure. Avoiding, or not receiving, a diagnosis prevents dementia patients and caregivers from accessing the proper care that comes with a diagnosis.

Providers–PCPs in particular–are often reluctant to conduct routine, pre-symptomatic screenings for memory care diseases because they struggle to be fully reimbursed for these time-consuming diagnostics. Although some PCPs have developed creative coding and organizational approaches that enable them to break even on these screenings, most experience the current reimbursement levels for early detection of dementia to be financially disadvantageous.

Although these hard truths have combined to make memory care a difficult space to innovate within for all stakeholders involved, there is ample room for improvement, especially for greater cross-stakeholder collaborations.

In the following we give an overview of the opportunities to inflect change along the patient memory care journey and highlight the stakeholder interventions that we believe are most impactful for combining cost savings and quality of life improvements. We focus on three moments in a patient’s journey:

The number of older Americans with dementia will continue to steadily rise over the next decade, while there appears to be little chance of a transformative therapy emerging during that period. The increasing financial and social burden of this growing population can only be effectively met through more integrative collaborations among senior care stakeholders. Some of the more promising cross-stakeholder collaborations are:

1. Increased investment by life sciences and plans into effective, affordable early detection for PCPs

One of the biggest structural challenges in the memory care space is the lack of pre-symptomatic detection of dementias, which limits the pool of potential clinical trial participants for dementia researchers while adding to the unanticipated costs for MA plans. Some life science organizations that are heavily invested in dementia therapies have begun to invest in more cost effective, early detection blood screens but payers have been slow to increase financial support for providers to conduct these diagnostics. As the price for early dementia screening technology continues to decline it will be in the interest of payers, especially MA plans, to increase provider reimbursement for their use.

2. Tailored benefit design around greater behavioral health and SDOH support for memory care patients

Reducing hospitalizations and ED use among memory care patients is one of the most powerful ways to lower the overall financial burden of this population on senior care stakeholders. Two interventions have been proven to be particularly effective in this effort: increasing behavioral health interventions for patients and their caregivers, as well as helping memory care patients maintain a healthy living environment in their homes. As the percentage of senior care organizations participating in risk arrangements continues to grow there is an incentive to shape benefit design around greater resources for behavioral health and SDOH interventions for these patients, which should save risk-bearing organizations money downstream.

3. More transparent communication between drug manufacturers and payers

Given the long history of disappointment around memory care drugs that treat the causes of these illnesses, it will be essential for manufacturers to demonstrate real-world evidence of their efficacy in order to convince payers to support them. This means that clinical trial results should be treated by both parties as a steppingstone toward gathering sufficient evidence of positive outcomes, and that payers and manufacturers will need to be more transparent about off-label evidence gathered during both the clinical trial and early post-market moments. Outcomes-based agreements could also be helpful here to help manage payer reluctance.

For additional information about caring for an aging population, check out www.advisory.com/seniors.