There's a growing market for home-based care. The Covid-19 pandemic drove an initial boom in the market, and the United States' growing number of older adults has sustained—and at times accelerated—investment in models that can care for people in their homes. This market also is financially attractive because it can help reduce organizations' overall spending by creating a lower-cost site of care.
Medicare Advantage (MA) plans have taken particular interest in home-based care. Several of the largest plans have been steadily building up their home-care infrastructures and rolling them into their broader, integrated ecosystems of services that can address their members' full suite of health care needs.
Further, MA's growing enrollment numbers and flexible financial and benefit model, when compared with traditional Medicare, creates a conducive environment to expand home-based care—especially for targeted services like home-based primary care and acute care at home.
Home-based care services will continue to grow in overall use. However, scaling these services poses real risks to the health care industry, including worsening care coordination, burdening an already short staffing supply, and exacerbating health inequities.
A sustainable path forward will depend on how organizations engage in the home-based care boom, especially since there isn't one clear, winning strategy for every type of organization nor for every type of home-based care model.
We see two paths that stakeholders can take—and each could affect your role in shaping the future of home-based care.
On the provider side, some may want to stay out of the fray for now and wait to see how health plans will reimburse for different home-based services. Others may be hesitant to move forward because they're waiting on regulatory approvals or trying to overcome workforce challenges. Playing it safe could help avoid wasting time and resources.
And on the health plan side, plans might want to wait to make moves in home-based care until they see what types of evidence providers can gather on home-based services—especially before deciding on things like member eligibility and reimbursement structures.
This waiting game could keep the industry stuck in limbo, with no one wanting to move forward unless they're sure it will pay off. But under this scenario, first movers would benefit from the acceleration in home-based care and cement their positions in the market—especially among home-care vendors, who will not hold back on moving forward in this space.
For any stakeholder, sitting back and waiting could mean ceding your power in shaping what future home-based care services look like and leave you vulnerable to the negative ripple effects outlined above.
On the other hand, stakeholders may engage in the home-based care boom, taking either a collaborative approach or a competitive one. In a collaborative approach, organizations with specialized expertise can find complementary niches and partner with health care providers and/or payers to fill existing gaps in their current home-based care models.
In a competitive approach, organizations can emulate similar models and build out their own infrastructures for pilot programs or dedicated home-based care services lines. Stakeholders should be deliberate in designing their approach around their capabilities and market context, because it might not be possible—or the right strategic move—for an organization to offer every service themselves. And since there will be few who can do it all, it's likely that most organizations will probably fall in both the compete and collaborate approaches, depending on the type of service.
Regardless of whether they take a collaborative or competitive approach, organizations who pursue the "move forward" path will find themselves ahead of the game if health plans and federal and state governments make significant shifts in regulations and reimbursements for home-based care models—but that's a big if.
It will take the right concoction of market conditions and policy progress to see stakeholders make more long-term strategic investments in home-based care. Moving forward amid uncertainty is high-risk, but it's also high reward if stakeholders are able to reap the cost-of-care savings that home-based care may bring.
For any stakeholder, it will be imperative to adapt to the shift of more services to the home and the new standards of care that involves.
The home-based care market will continue to grow no matter which path we take to get there. But whether the health care industry is able to grow home-based care in a sustainable way depends on the moves leaders make now.
Visit Advisory Board's growing set of resources on home-based care and caring for an aging population to help chart your path forward.
Advisory Board recently convened executives from across the health care industry to discuss how to best support older adults' goals of aging in place.
Here are the main takeaways from the conversation.
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