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Substudy 1 Fact Sheet

Final Report of the Study on the Comparative Cost Analysis of Home Care and Residential Care Services (NA101-01)

Sponsor Organization:

Hollander Analytical Services Ltd.


This project is one of fifteen sub-studies of the National Evaluation of the Cost-Effectiveness of Home Care Project (NA101). It sought to determine whether home care for the elderly in British Columbia was a cost-effective alternative to residential long-term care for government funders. Specifically, it examined the relative costs to government of the two sectors, by level of care.


Data were obtained on four cohorts of clients for one year prior to initial assessment and three years post-assessment for continuing care. The cohorts were new admissions to the British Columbia continuing care (home care and residential care) system in the 1987/88, 1990/91 and 1993/94 and 1996/97 fiscal years. Data were used from a linked database at the University of British Columbia, allowing analysis of costs to government for home care services, residential services, pharmaceuticals, fee-for-service physician services and hospital services. Costs were compared overall and by the five care levels used in B.C.

Key Findings:

The project leader identified the following outcomes:

  • Costs for home care clients, by level of care, are some 40 to 75 per cent of the costs of facility care, with PC and IC (the two lowest levels of care) at about 40 per cent, IC2 and IC3 (the two intermediate levels of care) at about two thirds and EC (the highest level of care) at about three quarters of the costs of facility clients.
  • For home care clients who remain at the same level and type of care for six months or more, the costs are about one half, or less, of the overall costs for facility clients.
  • For home care clients who changed their type or level of care but did not die, costs are about 70 per cent of the costs for facility clients for the lower levels of care, about 80 to 90 per cent for intermediate levels, and about 90 per cent or more for the highest level.
  • The costs for home care clients who die in a given six month period are higher than for facility clients who die.
  • The costs for home- and community-based continuing care services only (that is, direct care, homemakers, adult day care and assessors), are about 20 to 50 per cent of the costs of residential long term care, across levels of care.
  • Hospital costs account for about 30 to 60 per cent of the overall health costs for home care clients and medical services account for about 5 to 10 per cent.
  • Hospital and medical costs account for approximately 15 per cent or less of the costs for clients in long term care facilities, with long term care facility care accounting for about 80 per cent or more of costs.


The project author indicated that the study's findings are important because, in his view:

  • They constitute critical new findings with major implications for policy and program delivery: to the extent that appropriate substitutions of home care are made for residential care, overall continuing care costs can be reduced, all other factors remaining constant, particularly for clients who are relatively stable. Further replication of the findings in other jurisdictions and over time will be required to verify these findings.
  • When it comes to home care, the costs are in the transitions, making it less cost-effective for those who change their type and level of care. The challenge will be to reduce the costs of transitions and to develop programs to decrease the use of hospital services by home care clients.
  • As well, there appears to be considerable potential for cost savings through new and innovative programs for home-based palliative care and hospice care. The author notes there is relatively little literature on the cost-effectiveness of continuing care service delivery systems, and suggests that a national database on home care be developed as soon as possible.

Evaluation Methodology:

The data used for the analysis were obtained from the University of British Columbia which maintains a linkable longitudinal database with data for hospitals, physicians, drugs, continuing care and some aspects of vital statistics. The data presented a number of challenges in regard to preparation for analysis, and the concept of a full time equivalent client for the study was used, allowing the analyst to take a period of time and include into the analysis all clients who received care during that time period. Methods for calculating costs were also developed to meet challenges in the need to standardize MSP and Pharmacare costs and to calculate unit costs for hospital care.

Resources Developed:

The report presents a series of policy agendas relating to continuing care, particularly how continuing care fits into the emerging model of structuring the delivery of health services in Canada.

HTF Contribution to the Project:

$1,505,000 (divided among the 15 sub-studies)

Language of Report: