little home care? Why do HEW planners make so little effort to place home health care higher on the agendas of HSAs?

The response seems to be a fear of the aggregate costs of taking patients away from hospitals and nursing homes, or overutilization of home health care, of expansion of home health care by the addition of more social services to the medical services, and of destructive competition through uncontrolled proliferation of home health care providers. Clarification should tell which fears are groundless and show where and how to be on guard against genuine dangers.

Many see CON as a means of protection against cost increases. All too frequently, CON has been looked upon as though it were a proven method of cost containment that could be applied to home health care. On the contrary, as Salkever and Bice" have concluded, "While the composition of hospital investment is altered by CON, the total level of investment is not reduced. . . These findings are at variance with the presumption that inflation in the costs of hospital services can be reduced substantially by CON controls on hospital investment."

They have urged rate review and PSROS be considered as potentially more useful for cost containment. At the institutional level, cost containment techniques that appear to work in the short run, involve the crude method of reducing labor costs by attrition or by layoff and government wage and price controls. These are all outside the scope of both CON and HSAS.

Furthermore, CON may be mistakenly thought by some to address cost effectiveness, which it does not. CON is not a monitoring mechanism as rate setting and PSROS are. CON does not explicitly deal with quality and manpower. The concept of cost containment is related, but not identical to cost effectiveness. Only the concept of cost effectiveness goes beyond containment and links cost to the quality of care and the impact on the patient.

Michigan's Office of Services for the Aging" in a report to Governor Millikan has recognized that the types of services available are a major influence on cost. The report contends that in northern states, the reliance is on hospitals and nursing homes--with no evidence of a shift in emphasis to home health care. In contrast, they have found southern states are coping with heavy use of health and social care by the elderly with increased use of in-home, outpatient and community services. The Michigan report contends that this is happening in southern states because, "they can no longer afford the higher cost options and personal choice is predominantly for care in one's own home."

In advocating a substantial increase in home health care, the Michigan report" recounted the institutional dislocation and cost shifts that could follow:

As there is greater reliance upon in-home and community services, there should be a decreased reliance upon institutional services, hospital services in particular. The effect is likely to be a declining hospital population, increased per capital costs for hospital services, and subsequent increases in reimbursement rates. If this issue is not addressed, and alternative care services are developed, it is near certainty that the aggregate costs for health/social care will increase at a greater rate than at present.

The danger is real; however, the burden may be misplaced. Given the documented extraordinary costs of hospitalization

and the generally acknowledged inappropriate placements in hospitals and nursing homes, the burden should be on these institutions to prove that, at the very least, continued institutionalization is an alternative to home health care. The hypothesis could be advanced that one reason for restricting the expansion of home health care is that no way has been found to offset the expenditure by a reduction in spending for often inefficient institutional care. In terms of long-term care, the Congressional Budget Office" has been blunt: "Public programs disproportionately support nursing home care. Less than 10 percent of public funds are for home based services... If all services were readily available, the distribution of the disabled and elderly among levels of care would be quite different from its present distribution. There is a large, unmet demand for sheltered living arrangements, congregate housing, and home health care."

In one of the most methodologically sound studies, Greenberg estimated 9% of the 1974 Minnesota nursing home population could be cared for less expensively at home. He found that only at the worst disability level is home care as or more expensive than nursing home care. The Congressional Budget Office" has noted the danger of a net cost increase by deinstitutionalizing patients and providing them with home health care without considering restructuring long-term care.

Despite evidence of possible savings from deinstitutionalizing some present nursing home residents, the number of the noninstitutionalized disabled who are bedridden or need personal care assistance is so great that patients removed from nursing homes would be quickly replaced. Moreover, home health services, if not limited to those who had first been institutionalized, would be demanded and needed by so many of the noninstitutionalized disabled that there would be a net increase in expenditures.

The evidence is far stronger on the hospital side that home health care could be used without replacement of patients in hospitals. How hospitals and nursing homes cope with the financial loss of patients will be one factor in assessing the rate of increase in the nation's health care costs.

The total costs of health care will increase in any event as a higher proportion of our population becomes elderly and suffers from chronic disease. However, home health care may be able to slow the rate of increase. A substitution of home health care for hospital and nursing home care would seem to meet patient preferences while lowering cost to third-party payers.

The Michigan report" recognized the need for a definition that can provide a balance and prevent abuse.

Additionally, while the report continually refers to possible cost savings, in no way is it suggested that cost savings automatically occur when lower unit cost services are made available. For example, reimbursing a family $16 per day to care for a 'mom,' rather than pay $20 a day to a nursing facility would not save program dollars if nine other families who would care for their 'mom' without reimbursement now apply for and receive membership in the program.

Despite such dangers, many reports come out strongly for home health care, not only as an alternative to acute care, but as an alternative to nursing home care. One strong cost argument in favor of such care compared to nursing home care is stated this way.

Just as significantly when discussing costs, home care can be phased out or lessened for many people over time, while nursing home care usually results in dependency and continual use until death. Thus, even if temporary home health or home service costs are not truly 'cheaper' to the State for the first few days compared to a nursing home, they very likely will be over a longer period.

The favorable comparisons between institutional care and home health care make the further expansion of home health care an important policy direction. Present government policies are restricting that expansion. Medicare requires 3 days of prior hospitalization before granting eligibility for home health care. Medicare Part A also restricts the number of home health visits to 100. While the federal medicaid regulations are on the surface more liberal, these regulations permit states to use medicare eligibility requirements for medicaid, which many have. If government planners are serious about cost effectiveness, they must consider an expanded definition of home health care need that permits greater access and, at the same time, balance it by requiring enforcement to prevent abuse.

A distinction needs to be made between two views of cost effectiveness: cross-institutional comparisons of home health care, usually with a hospital or nursing home (which have just been examined) and comparisons among home health providers (which will be reviewed).

The comparisons of cost effectiveness among home health care providers pose many metholodogical problems, which make it impossible to draw firm conclusions. One key need is to develop uniform reporting of costs and services so that firm conclusions can be drawn. Failure to provide for uniform reporting will further complicate attempts to assess crossinstitutional cost effectiveness.

Provider financial reports rarely show what was included or excluded in the cost calculation. It is not possible to tell whether capital costs, professional services applied by another body, such as a public welfare department, or physicians' fees were included. There are also no longitudinal studies that could provide a basis for judgments on the duration of care from year to year. Neither is financial and statistical data linked to the intensity, duration, or complexity of the services rendered.

Meanwhile, rough comparisons are being made between not-for-profit agencies, proprietary ones, and among established and newer not-for-profit agencies. Florida found a wide range of costs and staffing ratios among not-for-profits. It also found that so many not-for-profits had relatives on the board that the recommendation was made to set a limit to two relatives per board. Etzioni" examined the legally permissible but no less unethical abuses that some established and new not-for-profits in health are able to get away with because of their structure. These small numbers of abuses are tainting the good works of the vast not-for-profit area. On the other hand, there have been findings among proprietary providers that suggest excessive billings to medicare for lavish comforts of the providers. A number of other serious scandals have broken out among proprietary providers. What these findings reveal on the cost issued is that agency auspices is not a useful way of examining cost, and may, in fact, be irrelevant. If any generalizations can be made, it will after more uniform cost reporting.

The expansion of home health care is warranted on cost grounds based on the present federal and state definitions of need. Decision makers considering expanded definitions of need for federal and state reimbursed services will find, as the Congressional Budget Office has, that the area of unmet need is frequently in home health and not in new institutional care.

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ACKNOWLEDGEMENTS

We want to thank those who have been helpful in the preparation of this monograph. Al Hunter College: Dr. Peter D. Salins, Dr. Robert C. Weaver and Elinor Rubin. We were particularly fortunate to receive viewpoints, references or information from the following people holding divergent opinions: Stephen Beaudry, Joint Commission on Accreditation of Hospitals, Dr. Philip Brickner, St. Vincent's Hospital; Rose Caserta, National League for Nursing: Steve Crystal, NYC Human Resources Administration, Jane Leiken. Bergen Passaic Health Systems Agency: Joseph Maniscalco, Group Health Insurance's Home Health Services, Mary Majer, NYC Department of Aging: Robert O'Connell, US Department of HEW, Region 11; Simon Podair, Mayor's Office of the Handicapped; Ronald Rosenberg. Homemakers Upjohn; Mary Walsh, National Council for Homemakers-Home Health Aide Services, Inc.

Of course, all the views expressed are the authors' responsibility and do not represent a position of Hunter College or its Urban Research Center.