Study Shows Outpatient Chemotherapy Less Expensive Than Home Health Care Delivery

November 1, 1995
Oncology NEWS International, Oncology NEWS International Vol 4 No 11, Volume 4, Issue 11

MARINA DEL REY, Calif-A detailed financial analysis of the costs associated with chemotherapy delivery showed home health care costs to be, on average, 2.5 times higher than those incurred in an outpatient clinic setting, said Patrick A. Grusenmeyer, MPA, financial administrator for the Ochsner Cancer Institute, New Orleans.

MARINA DEL REY, Calif-A detailed financial analysis of the costsassociated with chemotherapy delivery showed home health carecosts to be, on average, 2.5 times higher than those incurredin an outpatient clinic setting, said Patrick A. Grusenmeyer,MPA, financial administrator for the Ochsner Cancer Institute,New Orleans.

Speaking at the Association of Community Cancer Centers' annualconference, Mr. Grusenmeyer said that outpatient clinic care hasbeen shown, as one would expect, to be a cost-effective alternativeto inpatient hospital care-sometimes up to 50% less costly. Butthere are very few studies comparing the costs of outpatient carewith home health care, he said.

At the Ochsner Cancer Institute, this is not simply a theoreticalconcern. The Ochsner Health Plan (jointly owned by a group of450 physicians and Ochsner Hospital) is responsible for closeto 100,000 "covered lives" in the New Orleans area,including the 12,000 enrolled through a Medicare-risk contractthat has been in effect since January, 1995.

"Since we bear the risks for these patients, we need to knowwhere we will derive the best patient care for our limited capitateddollars," he said. One area where they found dramaticallyrising total costs was home health care.

Medicare requires no deductibles or copayments for home healthcare charges, which "makes it attractive to patients,"he said. In fact, 40% of all home health care expenditures arebilled to Medicare.

Ochsner researchers decided to "look at cost, because itis the key factor in the capitated environment we are in,"he said. They considered evaluating charges for services, buthe observed that "in our market, we can no longer set prices,and, therefore, charges have very little to do with the amountof money reimbursed."

Mr. Grusenmeyer said that standard drug treatments for commonmalignancies, such as breast, colon, and lung cancers, were chosenfor study, to give the results the most relevance to other centers.A range of treatment lengths were included, as were the costsof providing three supportive measures-transfusions, hydration,and antibiotics.

The researchers then identified the three major categories ofcost for providing chemotherapy services and their components:(1) personnel-oncology nurse and pharmacist time, (2) drugs andsupplies-acquisition and disposal costs, and (3) overhead-costsfor obtaining and occupying space, and support personnel time.Physician fees and billing expenses were not included, becausethey were deemed similar for both settings.

For drugs and supplies, the actual average cost for each treatmentwas calculated, but since personnel and overhead costs had tobe spread over more than one treatment, they were evaluated usinga unit cost method.

When the dollar amounts were determined and compared for bothsettings, "the results were a little bit surprising,"Mr. Grusenmeyer said. For each cost component, outpatient carewas significantly less costly than home care. On average, it was2.5 times more expensive to provide any of the chemotherapy treatmentsstudied in the patient's home.

The average cost per treatment was $556 for outpatients and $1,343in the home care setting. Although the nurse-time component foroutpatient vs home care was a similar percentage of the totaldollar costs (13% vs 14%, respectively), the actual dollar costper treatment was significantly different ($72 for outpatientsvs $188 at home).

Drug costs as a percentage of total charges were similar for thetwo settings (69% in outpatient and 66% in home care); however,when the actual dollar value was calculated, the cost for theoutpatient clinic was $384 vs $886 for home care.

The researchers were surprised by the higher cost paid for drugsby the home health care department, and felt the department couldget a better price with more aggressive purchasing. Home carealso incurred significantly higher costs for supplies becauseof the standard use of infusion pumps for drug delivery.

To remove the effects of the higher drug prices, the investigatorsdid a cost comparison that did not include this variable. Thisanalysis unexpectedly found that home care costs were then threetimes more expensive than outpatient care.

Dedicated Resource Use

The degree of utilization of dedicated resources also greatlyimpacted the average cost per treatment in each setting. For example,in the outpatient clinic, pharmacist time accounted for only 2%of the total cost vs 14% in the home health care department. "Thepharmacist in the home health care department must not be quiteso busy," he noted.

As expected, the outpatient clinic's overhead costs were a greaterpercentage of total costs than those of the home care department(16% vs 6%, respectively). However, when a dollar value is calculated,the difference is not significant ($89 for outpatient vs $81 forhome care).

The numbers for the supportive care measures were "not quiteas dramatic," he said, but delivery of supportive care athome is on average 1.5 times more expensive than in the outpatientclinic.

"Home care services are appropriate in selected cases; however,in light of the higher cost for home care, careful considerationshould be given to the most appropriate treatment setting,"he said.

He believes that careful analysis of cost elements can help inachieving future savings in either setting. For example, if theoutpatient clinic extended its hours to include some night andweekend hours, it could decrease the unit cost per treatment attributedto overhead.

In future studies, measurements of patient satisfaction, familyburden, and safety issues for the outpatient clinic and home caresetting will be compared.

Related Content:

News