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.1 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 2025.2 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.3 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).4 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
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:
- 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.
- 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.
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:
- 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.
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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.6 These individuals face housing problems such as overcrowding, high costs, lack of kitchen facilities, or lack of plumbing facilities.7
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 circumstances 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).
- 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.
- 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—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.
- 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.
- 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.9
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.
