Hospice Care Can Lower Spending in High-Cost Regions

Incentivizing hospice care and launching hospice educational efforts in regions with high medical costs could have a significant impact on U.S. healthcare expenditures, researchers find.

To reduce healthcare spending, areas of the country with relatively high medical service costs would benefit most from increased utilization of hospice care, according to a study recently published in Health Affairs.

The study's authors focused on the potential economic benefits of increased hospice care because medical services in the final year of life account for a large share of total U.S. healthcare expenditures.

They found that "hospice use accounted for 8% of the expenditure variation between the highest and the lowest spending quintiles, which demonstrates the powers and limitations of hospice use for saving on costs."

A 2010 study published in the journal Health Services Research found that 5% of Medicare beneficiaries account for more than a quarter of Medicare spending in their final year of life.

The Health Affairs study, titled "Longer Periods of Hospice Service Associated with Lower End-Of-Life Spending in Regions with High Expenditures," is based on Surveillance, Epidemiology, and End Results (SEER) Medicare data and Medicare claims information.

The data sample features 103,745 Medicare beneficiaries who died from nine forms of cancer such as breast, lung, and liver tumors within three years of diagnosis. The study period was from 2004 to 2011.

Cost Analysis
The unadjusted (non–age-sex-race-adjusted) mean end-of-life care expenditure per decedent "was $39,600, ranging from $31,256 in quintile 1 to $49,680 in quintile 5. The mean length of hospice service in the final six months of life was 10.9 days, ranging from 13.0 days in quintile 1 regions to 7.9 days in quintile 5 regions."

Researchers found that the biggest economic benefit from hospice care is derived from increasing utilization in high-medical-service cost regions of the country. 

"Longer periods of hospice service were associated with decreased end-of-life expenditures for patients residing in regions with high average expenditures but not for those in regions with low average expenditures," the researchers wrote.

Regional Care Differences
The way physicians practice medicine likely is a key factor in determining the economic impact of hospice care utilization, they determined.

"It is well established that physicians in different geographic regions practice differently. For example, physicians practicing in high-expenditure regions may be more likely than those in low-expenditure regions to recommend discretionary services for which strong evidence is lacking, and to test and treat patients intensively."

In contrast, the economic benefit of hospice care was found to be limited in regions of the country where the practice of medicine is more tight-fisted.

In these regions, increased hospice utilization generated a relatively low economic offset to inpatient and outpatient care at hospital settings, the researchers wrote.

"Whether or not hospice use results in cost savings is determined by the offset between the increase in hospice expenditures and the decrease in inpatient or outpatient expenditures."

Healthcare Policy Implications
While research has shown that hospice care has benefits for patients with terminal conditions, the study found that the economic benefits of hospital care vary regionally.

Incentivizing hospice care and launching hospice educational efforts in regions with high medical costs could have a dramatic impact on total U.S. healthcare expenditures, according to the study.

"Such targeted cost-saving measures may provide substantial economic benefits on a national scale, given that intense end-of-life care expenditures constitute a significant proportion of annual Medicare expenditures."