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Summary  Summary  

The pandemic has created an opportunity for change in healthcare whereby $265 billion worth of care services for Medicare fee-for-service and Medicare Advantage beneficiaries could shift to home care by 2025. The shift would represent a three- to four-fold increase in the cost of care being delivered at home today for this population. Pandemic-related factors, such as the growth in virtual care and new technologies, including remote patient-monitoring devices, have made home care possible. Venture funding for digital health companies reached a record-breaking $29.1 billion in 2021.  

Home care could improve the quality of care and patient experience by providing comprehensive care in the comfort of patients' homes and potentially reducing preventable adverse health events. Stakeholders, including payers, healthcare facilities, physician groups, care-at-home providers, technology companies, and investors, could see substantial value, although the types of benefits and costs would vary by stakeholder. The three categorized groups of services that could be delivered at home are services with capabilities in place that may benefit from scaling, services where capabilities exist that could be stitched together into a comprehensive offering, and services where existing capabilities will need to be enhanced or extended.  

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Predictions & Opportunities  

Care at Home could provide better care for patients in the US, especially for high-risk patients with chronic conditions, the elderly, and those at low risk. The benefits and challenges associated with Care at Home are delineated into three categories of services that could be delivered at home: services with capabilities in place, services where capabilities exist that could be adapted for a comprehensive offering, and services with some capabilities but others that require further transformation. The continuum of opportunity for Care at Home services will depend on several factors such as the evaluation of which services can be delivered at home, economic viability, physician awareness, perceptions and capabilities, and patient preferences. With regards to CMS, payers, providers and other stakeholders all could play a crucial role in accelerating the growth of Care at Home services and fulfilling CMS’s strategic pillars; by advancing equity, and naturally expanding access to affordable healthcare, while driving person-centered care innovation.   

Care at Home could influence CMS, policymakers and stakeholders in several ways. Here are a few possible examples:  

• Cost savings: The potential cost savings associated with Care at Home could be an attractive proposition for policymakers. Home-based healthcare services can be more cost-effective than inpatient care or nursing home care. Medicare and Medicaid may benefit from incentivizing the use of home-based healthcare services to reduce costs while still providing high-quality care.  
• Improved patient outcomes: Care at Home could improve the quality of care and patient experience outcomes due to increased convenience and personalized care, potentially reducing preventable adverse health events for diagnosis, treatment, or self-care. This could be appealing to policymakers who are focused on improving healthcare outcomes for their constituents and reduction in healthcare costs over the long term.  
• Increased access to care: Care at Home could increase access to care for patients who may have difficulty traveling to a healthcare facility or who live in remote areas and the advancements in technology and the aging population, there is a growing demand. This could be an important consideration for Medicare and Medicaid policymakers who are focused on improving healthcare access and equity.  
• Technology and innovation: The growth in virtual telehealth care, the emergence of new technologies and capabilities, cultivating investment in the digital health market and more patients with post-acute and long-term care needs evaluating their options are all factors that could be seen as opportunities for innovation and technology adoption. Policymakers who are interested in promoting innovation and technology adoption in healthcare may be interested in exploring and expanding the need for Care at Home services to ensure that patients have access to necessary care.  
• Need for improved data sharing: Improved data sharing among healthcare providers and payers can help ensure that patients receive appropriate care and prevent unnecessary hospitalizations or readmissions. Medicare and Medicaid may need to invest in data-sharing infrastructure to support home-based healthcare services. 

From Facility to Home – How healthcare could shift by 2025 

The pandemic has created a catalyst for true change whereby $265 billion worth of care services for Medicare fee-for-service and Medicare Advantage beneficiaries could shift to the home by 2025. 

Based on a survey of physicians who serve predominantly Medicare fee-for-service (FFS) and Medicare Advantage (MA) patients, we estimate that up to $265 billion worth of care services (representing up to 25 percent of the total cost of care) for Medicare FFS and MA beneficiaries could shift from traditional facilities to the home by 2025 without a reduction in quality or access. That number represents a three- to fourfold increase in the cost of care being delivered at home today for this population, although how the shift will affect reimbursement rates is not yet clear. What’s more, Care at Home could create value for payers, healthcare facilities and physician groups, Care at Home providers, technology companies, and investors. It also could improve patients’ quality of care and experience. 

How the COVID-19 pandemic has catalyzed Care at Home 

A variety of pandemic-related factors have created an opportunity to rethink Care at Home. These include the following: 

Care at Home may deliver more value and higher-quality care 

As the United States faces the ongoing COVID-19 crisis, stakeholders are exploring ways to provide higher-quality care, especially for aging patients, high-risk patients with chronic conditions or those who are healthy and at low risk. The answer may lie with Care at Home, with examples that include primary-care visits via telehealth, self-administered dialysis at home, and skilled nursing-facility services at home with remote patient monitoring and support for activities of daily living.  

Care at Home could improve the quality of care and the patient experience by providing patients with comprehensive care in the comfort of their homes and by potentially reducing preventable adverse health events for diagnosis, treatment or self-care. Additionally, stakeholders—including payers, healthcare facilities and physician groups, Care at Home providers, technology companies, and investors—could see substantial value, although the types of benefits and costs would vary by stakeholder (Exhibit 2 below). 

For example, a payer could benefit from lower medical costs resulting from the reduction of preventable adverse health events and the use of a lower-cost site of care. Value could also result from enhanced quality performance and more clinically appropriate and accurate risk coding. This value may be partially offset by the reimbursement for Care at Home services and the potential for induced demand through more convenient care.  

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Where care could shift from traditional facilities to the home

Care at Home cannot succeed without physician buy-in.(McKinsey’s Consumer Health Insights survey A recent June 2021 survey of physicians who serve predominantly Medicare FFS and MA patients found that 16 percent of respondents aged 65 and older said that they are more likely now than they were before the pandemic to receive home health services), and some have conditions that could be treated at home at a substantially lower cost.   

Based on the results, we estimate that up to $265 billion worth of care currently being delivered in traditional facilities for Medicare FFS and MA beneficiaries (representing up to 25 percent of the total cost of care) could shift to the home. This represents a three- to fourfold increase in the current spend at home for this population today, although how the shift will affect reimbursement rates is not yet clear (Exhibit 3). 

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What are the three categorized group of services that can be delivered at home: 

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Factors that could affect adoption 

The growth of Care at Home services could vary based on several factors. First, stakeholders will need to evaluate which services can be delivered at home to treat patients’ physical, behavioral, and social needs effectively. Care at Home providers, technology companies, and investors could play a role here by accelerating innovation. 

Second, adoption could depend on the economic viability of Care at Home. Some healthcare facilities and physician groups have had less incentive to pursue Care at Home for their patients because of the potential for lower (or nonexistent) reimbursement for care if provided at home instead of in a higher-cost setting. New reimbursement policies or payment innovation (for example, payment parity for telehealth or value-based payment arrangements) could improve adoption. 

Third, physician awareness, perceptions, and capabilities may be factors. Physicians could learn about the capabilities of Care at Home, investigate case studies and results of how high-quality care can be delivered at home, and receive training to administer the interventions. Payers could play an important role in spurring awareness and providing training and education to providers. 

Finally, adoption will depend on how patients feel about Care at Home. Patients could be made aware of Care at Home options, and they could state a preference for them over facility-based care. To encourage adoption, payers could cover certain services, and providers could recommend Care at Home to patients where clinically appropriate. 

How to accelerate growth 

To help accelerate the adoption of Care at Home services, payers, healthcare facilities and physician groups, Care at Home providers, technology companies, and investors could consider a variety of potential actions: 

Payers 

• Develop a value-backed Care at Home strategy with specific use cases. This may include situations where the reduced medical costs and increased revenues will outweigh reimbursement for services and potential for induced demand. 
• Redesign benefits to support direct delivery of Care at Home, as well as enabling services (for example, remote monitoring, care management, social supports, or assistance with daily living). 
• Create awareness and provide training and education to providers on the technologies available for Care at Home, as well as their uses and benefits. 
• Develop a network of high-value Care at Home providers and technology companies, as well as community-based organizations that can support Care at Home. 

• Expand reimbursement policies (for example, Care at Home reimbursement at parity with traditional reimbursement) or payment innovation models (such as shared savings on total cost of care) to encourage providers to support Care at Home. 
• Adopt utilization-management policies (for example, determination of appropriate discharge destination as part of transition-of-care programs) to facilitate the shift of care to the home from other settings where medically appropriate. 

Healthcare facilities and physician groups 

• Create value-backed Care at Home strategy with specific use cases in which the economics are favorable and patients benefit from higher-quality and more accessible care. 
• Develop Care at Home clinical models to deploy with patients (for example, primary and specialty telehealth care, in-home acute care, or in-home infusion services). 

• Establish partnerships with other providers or technology companies that can provide Care at Home or enabling services (for example, remote monitoring, care management, social supports, or assistance with daily living) or build capabilities internally. 
• Establish contracts with payers to ensure that Care at Home services are reimbursed in an economically viable way (for example, reimbursement at parity with traditional reimbursement or value-based payment arrangements). 

Care at Home providers, technology companies, and investors 

• Develop business cases or investment theses for Care at Home (for example, primary telehealth care, in-home dialysis, and remote monitoring). Size the market potential, evaluate the market landscape, and understand how the market may be evolving. 
• Evaluate opportunities, with providers and technology companies assessing how to build, buy, or partner for capabilities, and investors identifying potential assets. 

https://www.mckinsey.com/industries/healthcare/our-insights/from-facility-to-home-how-healthcare-could-shift-by-2025 

Topics to Explore 

In collaboration with relevant stakeholders and colleagues explore these short to long-term questions such as: 

1. How might you educate and train healthcare facilities, physician & stakeholder groups the benefit of Care@Home?
2. How might you comprehensively structure more viable payment innovations or policies to cater for the rapidly expanding Care@home market?
   1. Short term plans 12-18mos
   2. Mid-term plans 24-36mos
   3. Long Term plans 48-60
3. How might you create new customer journey maps (HCD methods) to explore new payment or reimbursement opportunities?
4. How might you adapt (pivot) or scale existing Medicare FFS & MA policies that support generally accepted Care@Home services that are requiring greater consumer demand?
   1. Primary home care
   2. Outpatient-specialist consults
   3. Emergency & urgent care
   4. Hospice
   5. Outpatient mental & behavioral health
5. How might you strategize a pipeline of Care@Home policy plans for longer term 2024-25 that support for more extensive services?
   1. Long term care (LTC)
   2. Dialysis
   3. Post-acute care (PAC)

 https://www.mckinsey.com/industries/healthcare/our-insights/from-facility-to-home-how-healthcare-could-shift-by-2025