Can Home Care Services Achieve Cost Savings in Long-Term Care for Older People?

OBJECTIVE: To determine whether efficient allocation of home care services can produce net long-term care cost savings. METHODS: Hazard function analysis and nonlinear mathematical programming. RESULTS: Optimal allocation of home care services resulted in a 10% net reduction in overall long-term care costs for the frail older population served by the National Long-Term Care (Channeling) Demonstration, in contrast to the 12% net cost increase produced by the demonstration intervention itself. DISCUSSION: Our findings suggest that the long-sought goal of overall cost-neutrality or even cost-savings through reducing nursing home use sufficiently to more than offset home care costs is technically feasible, but requires tighter targeting of services and a more medically oriented service mix than major home care demonstrations have implemented to date.