Avalere Health
An Inovalon Company
Insights

Dec 02, 2013

Avalere Identifies Three Ways To Reduce Post-Acute Care Spending

Published

Dec 02, 2013

Nowhere are there more opportunities for savings than in post-acute care (PAC) settings.

Per capita service use ranges from $60 to $450 for PAC, compared with $225 to $425 for ambulatory care and $250 to $400 for acute inpatient care. These differences mean that any hospital or health system serious about managing population—or episodic risk must have a PAC strategy.  And, it means that PAC providers must be ready to prove their ability to drive greater efficiencies.  

Avalere identifies three opportunities to reduce PAC spending:

  • Hospitals should discharge patients to the lowest cost setting that has demonstrated high quality services and effective outcomes. An LTACH or IRF initiated episode is two- to two-and-a-half times as expensive as a SNF initiated episode – for the same MS-DRG.  As the Vantage Care Positioning SystemTM analysis shows below, some hospitals discharge significantly more patients to these expensive settings than on average nationally.  This variation suggests inefficiencies in the use of PAC.  
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  • Institutional setting length of stays should be as short as possible. SNF length of stay also varies significantly, again suggesting opportunities for efficiency.  Often patients can be discharged home more quickly and safely.  
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  • Providers managing risk should reduce unnecessary readmissions. The average national 30-day re-hospitalization rate from SNFs in 2011 was 20 percent (Avalere Vantage Care Positioning System™ report).  But, some SNFs show rates of 10 percent to 15 percent, and these are the ones with whom hospitals should partner.

PAC performance will be an increasing focus of hospitals and health systems as the CMS bundling pilot comes online in full force in January 2014.  SNFs and home health agencies that can prove their value stand to benefit.  Avalere is unveiling a new post-acute care scorecard in January that is designed to help every market achieve the efficiencies that are possible.

Avalere is the essential voice improving healthcare. We stay ahead of the curve and generate deep content for clients across the entire healthcare industry. We look forward to partnering with you to make better business decisions. For more information, please contact Anne Tumlinson.

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