U.S. health care spending soared past $3.6 trillion in 2018, nearly one-fifth of the country’s gross domestic product (GDP). To curb that spending, stakeholders throughout the continuum of care are beginning to think more about “total cost of care” and less about isolated episodes.
Some of the largest in-home care providers are among those stakeholders, including Lafayette, Louisiana-based LHC Group Inc. (Nasdaq: LHCG). Founded in 1994, LHC Group currently provides home health, hospice and personal care services throughout 35 states and Washington, D.C.
Within the health care sector, there isn’t a single, universally accepted definition for what total cost of care means. Generally, however, the phrase usually refers to all direct and indirect costs attached to an individual’s care or treatment over a given period of time, even after that individual is discharged from a particular setting.
Within the past several months, LHC Group has begun capturing and studying its own total-cost-of-care metrics. The company has also started widely sharing that information with payers, industry leaders, policymakers and the public.
In some ways, doing so has given LHC Group a competitive advantage, CEO and Chairman Keith Myers told Home Health Care News.
“[Tracking total cost of care] positions us to be able to go to payers, an accountable care organization (ACO) or anyone,” Myers said. “We can say, ‘Not only do we have industry-leading quality scores and patient satisfaction scores, but we also can reduce your total cost of care by this much.'”
Specifically, LHC Group tracks total cost of care on a 180-day basis, starting with a patient’s initial 60-day home health episode of care then tacking on another 120 days. By tracking a patient for nearly half a year, LHC Group and its clinicians are able to stay connected with their patients long after its services officially conclude.
“We continue to track the total cost of care for all settings for 180 days from the day we admitted them in home health,” Myers said. “And we’re comparing our total cost of care to the baseline for an area or population.”
For sepsis patients, for example, LHC Group has a 180-day total cost of care that’s nearly 11% less than the industry average, internal company statics based on Centers for Medicare & Medicaid Services (CMS) claims data show. Meanwhile, for patients with congestive heart failure (CHF), LHC Group’s 180-day total-cost-of-care mark is roughly 3.6% less.
In addition to giving it an edge with payers and ACOs, its total-cost-of-care insights also position LHC Group for more gain-sharing arrangements, Myers said.
“That’s what positions us to get into gain-sharing arrangements eventually,” he said. “Possibly even participate as a convener in bundles moving forward.”
How does LHC Group keep its total cost of care down? For starters, the company relies heavily on its telephonic capabilities and call centers, which its patients and former patients can access whenever they have a question or concern.
“We might get a call from a patient, even though they’re no longer on our service,” Myers said. “That puts us in a position to help them and their decisionmaking. That’s what helps us reduce the overall cost of care — and the patient isn’t abandoned because we’re not billing for them anymore.”
Broadly, by staying in touch with patients on a longitudinal basis, LHC Group is able to steer individuals away from hospitals and emergency rooms.
While Myers cited more ACO opportunity as a potential benefit to LHC Group’s total-cost-of-care metrics, the company has already made pretty sizable headway in those relationships. When LHC Group acquired Almost Family in 2018, it also acquired Imperium Health Management, one of the country’s largest ACO management companies.
Of course, it’s not just providers like LHC Group that are experimenting with total cost of care.
CMS and the state of Maryland are partnering to test the Maryland Total Cost of Care (TCOC) Model, which sets a per capita limit on Medicare total cost of care in the state. The TCOC Model is the first CMS Innovation Center model to hold a state fully at risk for the total cost of care for Medicare beneficiaries.
Federal health care policymakers announced Monday that former Anthem and Aspire executive Brad Smith will be the Innovation Center’s next leader, taking over for Adam Boehler.