Cost avoidance—especially under value-based payment models—makes palliative care financially viable, say hospital executives.

Feb. 19—The number of hospitals offering palliative care programs has tripled in the last 15 years, a new study finds. That growth has come despite low payments from public and private payers for such care.

In 2000, less than one-quarter of American hospitals with more than 50 beds reported staffing palliative care teams, according to the study in the February issue of Health Affairs.

“But within fifteen years palliative care services were in place at 75 percent of hospitals of that size, at more than 90 percent of hospitals with more than 300 beds, and at 100 percent of the National Cancer Institute’s Comprehensive Cancer Centers,” the study found.

The driving force for much of that growth was the not-for-profit Center to Advance Palliative Care (CAPC), which provides tools, research, and training programs that have widely disseminated palliative care, according to the study’s lead author, J. Brian Cassel, PhD, director of palliative care research and an assistant professor at Virginia Commonwealth University.

Cassel said the growth is even more unusual because palliative care is a low-revenue, high-value service, in a time when many hospitals are seeking high-revenue profit centers.

 “The growth [at U.S. hospitals] has been pretty phenomenal,” Cassel said. He noted that the rise of value-based purchasing may have contributed to the growth.

Researchers found that more than 1,240 hospital palliative care teams trained through CAPC between 2004 and 2017, with 80 percent creating palliative care programs within two years.

Financial Benefits

The report also noted several substantial barriers to wide-scale adoption. Palliative care services have no dedicated funding source comparable to the Medicare hospice benefit. And the cost of staffing palliative care teams typically exceeds the fee-for-service revenue generated by billing providers. Most financial benefits, the study pointed out, came in avoided costs.

Researchers also found significant differences in the tax status of those hospitals providing palliative care services. In 2015, the study found palliative care was most common in large hospitals (300 plus beds). Fifty percent of for-profit hospitals, compared to 92 percent of public hospitals, and 90 percent of not-for-profit hospitals, offered palliative care programs. In all hospital size categories, for-profit hospitals were least likely to offer such palliative care.

Cassel said the reasons for those disparities are unclear and require more research.

 “Palliative care helps patients with serious illnesses improve quality of life and in some cases increases survival, while reducing pain and suffering,” Cassel said in an interview.

A 2016 Journal of Palliative Care Medicine study found significant cost and quality benefits associated with palliative care programs.

Hospitals’ Views

The study’s lead author, Dana Lustbader, MD, chair of palliative medicine at ProHealth, an accountable care organization in Manhasset, N.Y., wrote that the cost per patient for those enrolled in Medicare Parts A, B, and D in their final year of life was $10,435 less for those receiving home-based palliative care compared to usual care.

Ira Byock, MD, founder and CMO of the Institute for Human Caring at Providence St. Joseph Health, said “palliative care has been repeatedly shown to be fiscally positive to a system’s bottom line due to cost avoidance.”

Byock, author of “The Best Care Possible,” conceded that few palliative care programs pay for themselves through revenue, but said the ROI “is quite substantial in terms of avoided direct variable costs. That’s particularly pertinent and the ROI is actually rapid in environments where health systems share financial risk with payers.”

He said the direct variable cost per patient per day declines with palliative care without sacrificing quality.

“I would argue that quality actually improves significantly,” Byock said in an interview. “This is not mystical or magical. It improves because the key thing palliative care does is initiate conversations with patients about their values, preferences, and priorities. The most expensive treatments to provide are treatments people don’t want. And we do that a lot in American healthcare.”

Suzi Johnson vice president for Sharp Hospice Care, part of Sharp Healthcare, said a shift in thinking from the traditional fee-for-service (FFS) model to a value-based model is needed for wider palliative care adoption.

Johnson said the key to a successful, financially viable palliative care program is to identify chronically ill patients most at risk for high cost care and introduce palliative care in the first few days of hospitalization to create a pathway and a plan of care for those patients.

Research supports that people on palliative care and hospice live on average 30 days longer, she said.

She said implementing a trigger for the timing for palliative care referrals is important.

“We know the highest costs of care occur in the first five days of hospitalization,” Johnson said in an interview. “If you wait until the seventh day to make a palliative care referral, you not only deprive a patient in need of this care, but you also miss an opportunity to deal with those high costs early on. Early diagnosis of the patient condition and the timing of the palliative referral are the sweet spots for saving money and making the delivery of these services financially viable.”

Dara Bartels, CFO for La Crosse, Wis.-based Gundersen Health System, agreed.

“We look at quality and patient satisfaction measures and balance any finance cost against these two factors,” Bartels said in an email interview. “Those financial benefits come from seeing the patients at the right time for the right things and allowing access for other patients to improve – allowing compassion and quality across all of the communities we serve.”

Jim Diegel, CEO for Howard University Hospital, in Washington, D.C., said palliative care is “absolutely the right thing to do from a coordination of care perspective. We know that payers are demanding improved care coordination. Palliative care includes end of life care and better management of chronic conditions. By having a palliative care or advanced illness management program, a hospital brings in a very strong cost avoidance component.”

Dan Jantzen, CFO Dartmouth-Hitchcock Health, agreed that palliative care services are not well paid.

He likened the services to anesthesiology in the operating room.

“That’s not highly compensated either, but when you look at the payment for the overall episode of care, we are reasonably well-compensated for the surgery itself,” he said.

Jantzen said the America is at the beginning of a significant national aging phenomenon that will rapidly grow over the next 30 years.

“For many years we were providing the wrong care in the wrong place at the wrong time, the antithesis of our mission statement,” he said.

Jantzen said Dartmouth found in several studies a 12 percent to 20 percent decrease in per-patient per-day costs when palliative care was introduced.

“The care delivered meets patient desires and our costs of providing care significantly decrease,” he said. “Lowering that cost of care directly impacts our margin on that episode of care.”

Mark Taylor is a freelance writer based in Chicago. 

Publication Date: Monday, February 19, 2018