For the first time in decades, U.S. healthcare spending may actually have fallen in 2020, new data shows.

Several factors likely contributed to the possible decline. according to the non-profit research and consulting company Altarum, which released a preliminary analysis of last year’s national health spending on Tuesday. These factors include a year-over-year decline in hospital and nursing home care and an increase in home health care.

“[Spending] Prescription medication and home health care numbers have actually increased over the year, with the latter likely related to people choosing home care rather than nursing homes to avoid exposure, ”reads the Altarum analysis .

Source: Altarum

In particular, Altarum economists estimate that national health spending in 2020 was 2% lower than in 2019, a decrease of about $ 75.8 billion.

According to the actuary’s office at the Centers for Medicare & Medicaid Services (CMS), total U.S. health care spending in 2019 was $ 3.8 trillion, up 4.6% year over year. Overall, the share of the economy in health expenditure, measured in terms of GDP, was 17.7% in 2019.

A drop in national health spending of $ 75.8 billion may seem relatively small at first glance. But even a slight decrease – or just the possibility of one – is significant considering that total health spending in any given year has been no less since at least 1960 than it was the previous year.

“This is the first time we’ve seen negative growth or a decrease in spending based on this preliminary data,” Corey Rhyan, senior analyst at Altarum, told Home Health Care News. “It’s a major finding, however, and it depends a lot on how some of the underlying data will play out.”

Compared to 2019, hospital care spending fell 7% in 2020, according to Altarum estimates.

Similarly, spending on medical and clinical services decreased 4.3% year over year.

Largely due to the COVID-19 virus and widespread efforts to keep vulnerable populations out of gatherings, home care spending fell 2.5% in 2020 compared to 2019, according to Altarum. Meanwhile, home health care spending increased by an estimated 2%.

While this statistic reflects the important role home health providers have played since last spring, it is not entirely surprising. The “home move” has been gradual in recent years, Paul Kusserow, CEO and President of Amedisys Inc. (Nasdaq: AMED) told HHCN.

“While the pandemic certainly accelerated the transition from facilities to home care, the transition has been underway for some time,” said Kusserow. “Home care is the most economical for all payers. This is where patients want to receive their care – and it has been shown that high quality results are achieved. “

Amedisys, based in Baton Rouge, Louisiana, is one of the largest home health and hospice companies in the country with approximately 21,000 employees and 415 care centers in the United States.

A safe bet

The new analysis of Altarum’s spending for 2020 is not set in stone. Most likely, economists will not be able to price the COVID-19 pandemic or all of its indirect health care effects for several months.

Traditionally, CMS does not publish fixed expenditure figures until December. For this reason, Altarum is preparing its preliminary analysis using data from the US Bureau of Economic Analysis (BEA) and its internal data Economic indicators of the health sector Frame.

Currently, these BEA data are unlikely to include all health-related expenditures from certain categories related to the public health emergency.

For example, increased activity related to COVID-19 testing and contact tracing could cause healthcare spending to exceed Altarum’s projected levels. Conversely, the pandemic-triggered recession may have squeezed spending on structures, equipment and services in non-traditional settings.

COVID-19 relief in the form of CARES Act payments and prepayments from CMS could also cause projections to be discarded, Rhyan said.

“They are aware of the direct money that went to hospitals to support their bottom line [and] Help them stock up on supplies to ensure they can more adequately tackle the pandemic. You are familiar with some of the changes that have been made to Medicare reimbursement such as: B. the accelerated payments that have to be paid back, ”he said. “In 2020, there were a lot of financial problems related to how much the federal government was directly supporting health care, which some of those estimates may not include.”

The main finding that nursing home spending has decreased – and home health spending has increased – is a surefire thing, however. In fact, this is a trend that will continue for the foreseeable future as nursing home operators are only just beginning to stabilize from a sharp and sustained decline in occupancy.

There are many indicators to support this, Rhyan said.

Hospital and medical expenses declined in March and April as most Americans decided to postpone any non-essential care. For example, hospital admissions without COVID-19 fell to about 80% of the projected levels at the national level by the week ending December 5. according to the Kaiser Family Foundation.

However, after this sharp decline, spending quickly normalized. This was not the case with qualified care facilities (SNSFs) and home health services, said Rhyan.

“Home care did not fall off a cliff like hospital care and medical services at the start of the pandemic,” he said. “There was a much slower decline, but a very persistent decline. It actually kept going down year-round without the kind of recovery that hospital and doctor care had. “

Right off the bat, there wasn’t a big drop in home health care. Instead of a sustained decline, however, there has been a steady increase in spending.

“I think that points to a more permanent, longer-term trend,” said Rhyan.

Amedisys has seen firsthand the resilience of home health care. In the third quarter of 2020, the company increased its total number of home-admitted patients by 5% compared to the same period last year, with the total patient volume increasing by 6%.

“The pandemic has clearly shown patients and payers the importance of providing post-acute care services at home, and this trend will not subside, it will only accelerate,” said Kusserow. “As a result, you will see faster development – and adoption by payers – of SNF-at-home models offered by the home healthcare industry.”

reduce costs

Usually, health spending is “pretty robust,” said Rhyan, during periods of recession. Altarum’s preliminary analysis suggests it did not, which is another interesting aspect.

“It really wasn’t as a result of any direct cause of the pandemic,” Rhyan said. “There was the disruption and slowdown in the electoral supply, for example at that time.”

In the future, spending on home health care is also likely to increase due to the possible evolution of the home health benefits themselves.

Today, home health care is often viewed as post-acute care, although only a third of patients actually go to home health care after an institutional stay. In the future, political decision-makers could try to make the benefits more comprehensive and flexible.

The Quality Home Health Care Partnership (PQHH) has worked diligently to make this happen, Managing Director Joanne Cunningham told HHCN.

“We’re actually exploring this from a policy perspective – by maximizing the home health benefits so that all Medicare beneficiaries have access to the services they need,” she said.

Government investment in home health care could also increase as another cost-saving necessity.

The federal government posted a deficit of $ 3.1 trillion in fiscal 2020, more than three times the deficit for fiscal 2019, according to the Bipartisan Policy Center. To date, the defect is over $ 735 billion in 2021.

Source: non-partisan political center

Ultimately, policymakers need to flatten this curve – and they may look to home health care for answers.

ON Study 2019 found that patients who received home care immediately after visiting the emergency room had a 90-day total cost of $ 13,012, compared to $ 20,325 for patients treated in the hospital.

Additionally, a 2017 study found that patients who received home health care after being discharged from the hospital saved the U.S. healthcare system approximately $ 6,500 over the course of a year.

That ability to bend the cost curve was only magnified during the pandemic, Cunningham said.

“I think COVID has shown us the weaknesses of some institutional care facilities and taught us valuable lessons on how we as a country can better manage care,” she said.