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From facility to home: How healthcare could shift by 2025

Up to $265 billion worth of care services for Medicare fee-for-service and Medicare Advantage beneficiaries could shift to the home by 2025.

When patients enter a healthcare facility, their primary aims are to become well again and to go home. While increasing disease burden and rising healthcare costs in the United States have already contributed to a boost in Care at Home services, the COVID-19 pandemic has created a catalyst to truly reimagine their future.¹

Based on a survey of physicians who serve predominantly Medicare fee-for-service (FFS) and Medicare Advantage (MA) patients, we estimate that up to $265 billion worth of care services (representing up to 25 percent of the total cost of care) for Medicare FFS and MA beneficiaries could shift from traditional facilities to the home by 2025 without a reduction in quality or access.² That number represents a three- to fourfold increase in the cost of care being delivered at home today for this population, although how the shift will affect reimbursement rates is not yet clear. What’s more, Care at Home could create value for payers, healthcare facilities and physician groups, Care at Home providers, technology companies, and investors. It also could improve patients’ quality of care and experience.

That said, several factors could affect adoption of these services. We outline those factors below, along with actions that stakeholders can take to address them. We also discuss why Care at Home services are rising, how Care at Home could create value for stakeholders and lead to higher-quality care for patients, areas where care could shift from traditional facilities to the home, and strategies for successfully adopting Care at Home.

How the COVID-19 pandemic has catalyzed Care at Home

A variety of pandemic-related factors have created an opportunity to rethink Care at Home. These include the following:

• Growth in virtual care: In February 2021, the use of telehealth was 38 times higher than prepandemic levels. While the future of reimbursement parity for telehealth is not yet clear, payers and providers have an opportunity to respond to evolving consumer needs. About 40 percent of surveyed consumers said that they expect to continue using telehealth going forward. This represents an increase from 11 percent of consumers using telehealth prior to the COVID-19 pandemic.
• More patients with post-acute and long-term care needs may be evaluating their options: As baby boomers age and families contend with the ongoing impact of the COVID-19 crisis, a growing number of patients and families may be considering their options for post-acute and long-term care. Ideally, eligible individuals would receive care in the most appropriate setting, whether that is at home or in a facility for rehabilitation, assisted living, skilled nursing, or long-term care. A combination of remote monitoring, telehealth, social supports, and home modification may enable more patients to receive some level of Care at Home. The share of Medicare visits conducted through telehealth, for example, rose to 52.7 million in 2020, from approximately 840,000 in 2019, according to a December 2021 report from the US Department of Health & Human Services.³
• Emergence of new technologies and capabilities: New technologies are making Care at Home possible for more people. Remote patient-monitoring devices, for example, allow providers to monitor patient progress remotely and receive alerts if there is an issue. In an April 2021 poll, more than one in five healthcare leaders said that their practice offers remote patient monitoring.⁴ The pandemic has accelerated the use of remote patient monitoring. For example, the Mayo Clinic used remote patient monitoring for ambulatory management of patients with COVID-19 and found that it was effective, with a 78.9 percent engagement rate; 11.4 percent and 9.4 percent 30-day emergency-department-visit and hospitalization rates, respectively; and a 0.4 percent 30-day mortality rate.⁵
• Growing investment in the digital health market: Venture funding for digital health companies was a record-breaking $29.1 billion in 2021. Comparatively, there was $14.9 billion invested in 2020 and $8.2 billion invested in 2019.⁶

Care at Home may deliver more value and higher-quality care

As the United States faces the ongoing COVID-19 crisis, stakeholders are exploring ways to provide higher-quality care, especially for an aging population. The answer may lie with Care at Home, with examples that include primary-care visits via telehealth, self-administered dialysis at home, and skilled nursing-facility services at home with remote patient monitoring and support for activities of daily living. These interventions can be delivered to different kinds of patient archetypes (for example, high-risk patients with chronic conditions or those who are healthy and at low risk) throughout the patient journey (for example, diagnosis, treatment and discharge, or self-care) as either point solutions or as a comprehensive offering.

To examine the current and future impact of this type of care, we have created hypothetical journeys with Care at Home for various patient archetypes (Exhibit 1). For example, consider 75-year-old Bernadette, who has coronary artery disease, chronic obstructive pulmonary disease (COPD), and diabetes. She lives with her husband, has limited mobility, and struggles to access healthy food. Under a traditional-care model, she may be admitted to the hospital with a heart attack and then discharged to a skilled nursing facility because of concerns about her ability to stay safe and engaged at home. Under a Care at Home model, she might be evaluated by a physician and sent home, where she could have an assigned nurse and care manager, remote patient monitoring, daily telehealth visits with a physician coupled with in-person care from a nurse, and meals delivered to her home by a community-based organization.

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