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The Health Economics of Palliative Care

The Health Economics of Palliative Care

ABSTRACT: Only a few studies have assessed the economic outcomes of palliative therapy. The major areas of interest include hospice care, the process and structure of care, symptom management, and palliative chemotherapy compared to best supportive care. Compared with nonhospice care, hospice care saves at best 3% of total care costs. Advance directives done early in the disease course may save end-of-life care costs, but when done in the hospital do not save money or influence care choices. Nurse coordination of palliative care maintained clinical outcomes of dying patients and saved 40% of costs. A structured ethics review of those likely to die in the intensive care unit also appears to match the type of care to the outcome, and save costs. There are remarkably few randomized clinical trials of pain and symptom control interventions in end-of-life care, so few conclusions can be drawn about current treatments. There are no examples of chemotherapy that save money compared to best supportive care. Current data suggest that changes in palliative care cost can only come from dramatic changes in how we provide care. One model is coordinated, expert, high-volume care that can prevent end-of-life hospitalization, with early use of advance directives. Preliminary data from our program support the hypothesis that costs may be reduced by 40% to 70%. [ONCOLOGY 16:801-812, 2002]

We can afford to die well, but it will require coordinated care with someone
in charge. . .

An aging population that demands more treatment[1] and
new technology[2] to stay alive will continue to pressure the current
health-care system. As much of palliative care concerns federally funded
Medicare and Medicaid, all of us have a share in this "medical
commons." Currently, about 25% of Medicare dollars are spent on patients in
their last 60 days of life,[3,4] and money spent for palliative care cannot be
spent for prevention, screening, or other treatment.

At the same time, the quality of cancer care that we purchase is
suboptimal.[5,6] Examples include studies showing that high-volume or specialty
centers/providers are associated with 5% to 10% better breast cancer survival,
twofold better survival for testicular cancer patients, less mortality for
prostatectomy, and up to fourfold better survival for complicated cancer
surgery. The Study to Understand Prognoses and Preferences for Outcomes and
Risks of Treatments (SUPPORT) showed that half of all dying patients had
unnecessary pain in their final days of life in academic hospitals.[7] Poor pain
relief has been found in academic practice[8] and in minority populations[9]—indeed,
anywhere searched.

We have identified some important questions about economic outcomes and
palliative care, which are listed in Table 1. The first question—what outcomes
justify treatment—although probably the most important (and clearly the most
contentious), is beyond the scope of this manuscript. The American Society of
Clinical Oncology (ASCO) could not describe a minimum benefit that would justify
treatment, but did state that some benefit must be demonstrable, and that cost
and toxicity should be considered along with benefit.[10] We will address the
other issues with data in this manuscript, based on a review of Medline from
1970 to the present and selected searches within bibliographies.

Hospice vs Nonhospice Care

Hospice has been recommended by ASCO as the most applicable model for good
end-of-life care in the United States,[11] but there are few solid data that
show hospice improves care or reduces costs (Table
).[12-19] The only
randomized clinical trial of hospice vs conventional care showed no important
differences by any measured benchmark (pain, ability to perform activities of
daily living).[15] Patients still used many hospital days (48 for control group,
51 for hospice group), but more of the hospice patients were hospitalized on the
hospice unit. There was no difference in diagnostic procedures or in total costs
of about $15,000 per patient.

Hospice care may be cost-saving in the last month of life.[16,17] For those
who enrolled during that interval—typically, over half of Medicare patients—Medicare
saved $1.26 to $1.65 for each $1 spent. Those who elected hospice tended to use
more resources in the months from diagnosis until about 3 months before death,
so the total disease management costs were equal.

Hospice may actually not be saving total disease management costs, but just
shifting them to costs not captured by our current accounting systems. In our
own study of Medicare hospice use in Virginia, matching hospice use with
Medicare files, total disease management costs in the last year of life were not
changed by hospice care (unpublished data, T.J. Smith et al). In the same study
of hospice use in Virginia, multivariate logistic regression showed that
patients who were very old, white, well-to-do, and without comorbidities more
often elected hospice than those who were not (unpublished data, T.J. Smith et
al). This group is also able to absorb more home care costs, out-of-pocket drug
costs, and so forth. The data are consistent with an affluent group of patients
using all the resources needed for treatment, then electing hospice. There are
few published data on whether the poor or minorities use hospice, how much those
patients will cost the system, or total costs.[12]

Studies from databases of hospice use have shown similar results, with one
study finding a 39% reduction in end-of-life care costs—by prevention of
hospitalization—if patients were in hospice more than 2 weeks.[18] Hospice
patients were more likely to receive home nursing care and spend less time in
the hospital than conventional care patients.[19] Conventional care was the
least expensive approach when overall disease management costs were calculated,
but hospital-based hospice ($2,270) and home care hospice ($2,657) were less
expensive than conventional care ($6,100) in the last month of life. Not
surprisingly, when full-cost accounting is done, home care provided by relatives
is not much different ($4,563 for each 3-month period) than care in a nursing
home or similar setting. Costs were lowest when the patient and caregiver lived
in the same household.[20,21]

Use of Advance Directives

No cost savings have been associated with the use of either typical advance
directives or do not resuscitate (DNR) orders done in the hospital,[13,14,22] as
shown in Table 3.[22-24] In one randomized study of 204 patients with
life-threatening diseases, the execution of an advance directive had no
significant positive or negative effect on a patient’s well-being, health
status, medical treatments, or medical treatment charges.[23]

For patients who had advanced directives prior to intervention in the SUPPORT
trial,[22] there was a 23% reduction in cost associated with advance directives—$21,284
with one, compared to $26,127 without one—suggesting that advance directives
may save money if executed early in the disease course. Nevertheless, Emmanuel
and Emmanuel[13,14] estimated that if all Medicare recipients had advance
directives and elected hospice, savings would only amount to 3%.

Changes in Process or Structure of Care

Role of the Nurse

Coordinated care with a nurse in charge of resource use has been shown to
preserve palliative care quality and lower cost. A randomized clinical trial of
a nurse coordinator for terminally ill patients in England maintained outcomes:
Most patients still had some unrelieved symptoms, but patient and family
satisfaction was helped slightly.[25] Total per patient costs were reduced from
£8,814 to £4,414 (-41%), primarily as a result of decreased hospital

The US Medicare Hospice Benefit requires similar nurse coordination, team
management, easy access to low per diem hospital beds for respite or temporary
care, and expanded drug coverage,[12,27] but at present only 15% of the eligible
population uses it. (For the most recent statistics, see Basic Statistics About
on the National
Association of Hospice Care's website, http://www.nahc.org/Consumer/hpcstats.html.)

In a Canadian study,[28] home nursing care was associated with more patients
dying at home. It is difficult to predict whether US physicians (or, for that
matter, patients) would accept mandatory nurse coordination—for instance, the
nurse could direct the doctor to make a home visit—and be willing to lose
patient control, reduce supportive care use, and lose income.

Increased Access to Care

The Regional Palliative Care Program (RPCP) in Alberta, Canada, increased
access of terminally ill patients to palliative care with an additional four
full-time physicians and nurse consult teams, 56 hospice beds at three different
sites, and greater availability of home nursing care. Fees for family physician
home and hospice visits were increased, and the palliative care team offered
extensive patient education.

On analysis, the RPCP significantly increased access to palliative care,
increased family practice physician participation in palliative care, and
reduced costs of care (Table 4).[29] Approximately 85% of patients discharged
from the cancer center chose to continue care under the direction of their own
family physician, with the RPCP available as needed. The authors estimated that
the program saved the province a total of $2,500,000 as a result of decreased
use of acute care facilities.[29]

Our own group developed the Rural Cancer Outreach Program (RCOP) between
rural hospitals and the Medical College of Virginia’s Massey Cancer Center to
bring state-of-the-art cancer care to medically underserved rural patients. The
key to the program is the coordination of all aspects of care by nurses at the
rural centers and at Massey Cancer Center. State-of-the-art care, clinical
trials, and palliative care have improved at the rural centers.[30] Pre- and
post-RCOP financial data were collected on 1,745 cancer patients. The cost for
each rural patient admitted to the Medical College of Virginia fell from $12,268
to $7,370 (-40%), compared to only a 2% decrease for all other cancer patients—consistent
with other coordinated programs.[31]

Other Coordinated Care Approaches

The City of Hope changed the culture of pain management with enhanced
institutional education programs, a highly visible and respected consultative
team, and a pain resource center for nurses and families. This was associated
with a decrease in admissions for pain control with marked cost savings (Table
).[32] The study was not randomized and could not account for other significant
changes such as the growth of managed care with restricted admission policies.
However, a reasonable conclusion is that this program led to better pain
management and probably saved money.

Coordinated ethics and intensive care unit planning for patients who are
likely to die also matches resource use to care and save money. An ethicist in
the surgical intensive care unit (SICU) taught the staff about issues of patient
choices in dying and the ethics of futile care. For those who died, there was a
decrease in length of SICU stay from 28 to 16 days and a decrease in SICU days
from 2,028 to 1,003 days, far greater than was observed in other parts of the
hospital; savings were estimated at $1.8 million.[33]

Similarly, Dowdy and colleagues conducted mandatory proactive ethics
consultations for all patients who had been mechanically ventilated beyond
4 days. They found a reduced use of the intensive care unit—due to either
the discontinuation of futile care or the transfer of patients to
lesser-intensity units—and a decrease in costs.[34]

Coordinated care that uses a less expensive setting reduces costs. Despite
higher costs for drug equipment and nursing, home narcotic infusions produced
lower total costs due to fewer hospital costs.[35]

We recently started an inpatient palliative care program based on the
following principles: Only expert specialized caregivers are used, care is
standardized with algorithms, and a high-volume unit is employed. Preliminary
analysis supports the premise that the quality of care can be maintained and
that costs can be substantially reduced compared to conventional care
(unpublished data, T.J. Smith et al).


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