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Substudy 5 Executive Summary

Study of the Costs and Outcomes of Home Care and Residential Long Term Care Services

by Marcus J. Hollander, Neena Chappell, Betty Havens,
Carol McWilliam, and Jo Ann Miller


Concern has been expressed in the media about the cost implications for the health care system of population projections that show a disproportionate increase in the seniors’ population in Canada. The implications of the “greying” of Canadians have been seen by health policy makers and planners to pose a significant fiscal challenge for the health care system.

In the past several years, there has been a growing interest in the potential use of home care services as a substitute for long term care residential services. There is some question, however, about whether or not home care can be a cost-effective alternative to residential care. While there appears to be some literature which suggests that home care is not cost-effective relative to residential care, other studies indicate that it is.

The cost-effectiveness literature generally only includes direct costs to funders and does not include either direct or indirect costs to informal care providers such as family members and friends. From a payer’s perspective, informal care represents a zero-priced alternative to formal services. From a societal perspective, however, informal caregiving reflects a real use of resources (for example, time spent providing care that could be spent working) and thus an economic social cost. A comprehensive cost-effectiveness analysis therefore requires comparisons of both the formal and informal costs of care and the outcomes of care.

Using a societal perspective that considered both formal and informal costs, this study, the Study of the Costs and Outcomes of Home Care and Residential Long Term Care Services (Substudy 5 of the National Evaluation of the Cost-Effectiveness of Home Care) examined the comparative costs and outcomes of home care versus residential care. Specifically, the study examined whether it costs less to provide care in the community than in a facility, and whether the outcomes of care are worse, the same, or better for community clients compared to facility clients. The study also measured the informal costs of care by identifying the psychological, social, and financial burdens shouldered by family, friends, and volunteers looking after clients in the community and in facilities.

Assessment Tools

Five tools were used to examine the impact of care for each client in the study sample. A multi-section Client Questionnaire was used to obtain information about the client directly. This questionnaire obtained information about: the client’s sociodemographic background; functional and cognitive abilities; perceptions of quality of life; and use of, and satisfaction with, health related services. A second multi-section instrument, the Caregiver Questionnaire, was used to obtain information from a family member, friend, or other informal caregiver about his or her experience of providing care to the client. This questionnaire obtained information about: the caregiver’s sociodemographic background; care-related stress; and satisfaction with the client’s use of health related services. In addition, three diaries were used to collect information about time and assistance provided by formal service providers either in the community or in long term care facilities, time and assistance provided by informal caregivers, and expenditures related to clients’ health care needs.

Home Care and Residential Care Clients

The study sample consisted of individuals who were 65 years of age or older who were receiving long term care services either in the community or within a care facility in either Victoria, British Columbia or Winnipeg, Manitoba. Clients who were stable at their level of care and location of care (community or facility) were randomly sampled within each jurisdiction. A total of 580 clients (222 from the community and 358 from facilities) participated in the study.

Approximately 77% of the sample was female. Some 63% of the female clients and 57% of the male clients lived in facilities. About 53% of the sample was 85 years of age or older, and almost 9% was 95 years or older. Some 64% of the sample was widowed. Approximately 29% of the clients had grade 8 education or less and an additional 30% had some post-secondary education. About 57% of the sample had incomes of $15,000 or less. Over 40% of community clients lived alone and over 80% of facility clients had single rooms.

The primary focus of this study was to determine whether community and facility clients differed with respect to health related care costs. It was, therefore, important to show that the community and facility clients did not differ on the client assessment and outcome measures. A comparison of scores on a measure of functional assessment, however, indicated that community clients in the sample were more functional than facility clients, and that the distributions of clients in the two study sites were substantially different.

Therefore, the study sites were considered to be a replication of each other (as opposed to part of the same sample) and two new samples (a Victoria sample and a Winnipeg sample) were created by dividing the original sample of clients into care levels, making the community and facility clients comparable within each care level, and acknowledging differences between the two study sites.

By analyzing the data from the two study sites separately, similarities and differences between the Victoria and Winnipeg samples were highlighted. In both samples: facility clients felt better about their general health than community clients; community clients had higher cognitive functioning than facility clients and cognitive functioning declined as clients’ general functioning declined; community clients indicated they would like more instrumental support than facility clients but community and facility clients were comparable with respect to their desire for more emotional support; facility clients perceived their health related quality of life to be better than community clients; and community and facility clients were comparable with respect to their perceptions of overall quality of life.

In the Victoria sample: community clients had stronger social networks than facility clients; clients generally perceived that their health related quality of life decreased as their care needs increased; and clients’ satisfaction with the services they were receiving decreased as their care needs increased.

In the Winnipeg sample: facility clients felt better about their health than community clients; facility clients had higher perceptions of self-esteem than community clients; and community clients were more satisfied with services than facility clients.

Informal Caregivers

A total of 501 caregivers participated in the study, 184 for community clients and 317 for facility clients. The majority of caregivers were female, although approximately 26% of the caregivers were male. Some 30% of the caregivers were under 55 years of age. However, 23% of the caregivers of community clients and 12% of the caregivers of facility clients were 75 years of age or older. Approximately 23% of caregivers had a university degree; fewer than 3% had grade 8 or less.

Over 60% of caregivers were children and were equally likely to provide care to community and facility clients. Spouses and non-family members (such as friends and neighbours) were more likely to care for a community client, while other family members (such as nieces/nephews and grandchildren) were more likely to care for a facility client. Approximately 72% of caregivers were married. Some 16% of caregivers lived with the client. About 74% of caregivers indicated that they received assistance from other informal caregivers in providing care to the client. Approximately 45% of the caregivers reported that they were currently working. While the majority (79%) indicated that they worked 40 hours or less a week, approximately 15% indicated that they worked 50 hours or more. In general, caregivers of facility clients and caregivers of community clients had comparable incomes. Over 60% of the caregivers in the study provided care to someone in a facility.

In both study sites, caregivers indicated that the amount of behavioural disturbances experienced increased as the care level of the clients increased, but there was no difference between community and facility clients. As well, in both study sites, caregivers of facility clients perceived that they had less objective burden but more subjective (emotional) burden than caregivers of community clients. In the Victoria sample, caregivers’ satisfaction with the services the clients were receiving was affected by where the clients were living as well as the clients’ care requirements. In the Winnipeg sample, caregivers’ satisfaction with services was comparable for both community and facility clients and was comparable across care levels. In both study sites, caregivers’ satisfaction with the services clients were receiving was higher than clients’ satisfaction with the services.

Costs of Care Services

One of the goals of Substudy 5 was to obtain estimates of the costs of formal and informal home care and residential care by examining: the amount of time and type of assistance provided by formal service providers; the amount of time and type of assistance provided by informal caregivers; and out-of-pocket expenses of both clients and informal caregivers. Cost estimates were based on information provided in the various diaries and on an analysis of budget and operational cost data provided by regional health authorities in Victoria and Winnipeg.

The response rate for all of the diaries was very good: 94.1% for the Formal Services – Community diaries; 97.5% for the Formal Services – Facility diaries; 83.3% for the Informal Caregiver diaries; and 87.6% for the Client Expenditure diaries. The majority of the diaries were completed in a comprehensive manner.

The analysis of the cost data revealed two major findings. First, regardless of whether only formal care costs or both formal and informal care costs were considered, the results were the same in both study sites: community care was significantly less costly than residential care. When only formal or public costs (that is, cost to government) were considered, home care costs were, on average, about 50% of residential care costs. However, informal or private costs (such as out-of-pocket expenses and informal caregiver time) were considerable. When a societal approach which included both formal and informal costs was used, families were found to contribute one half or more of overall care costs of home and community care, and approximately one third of the overall care costs of facility care. Policy makers need to consider whether these proportions are reasonable and appropriate given that the government covers 100% of physician and hospital costs.

Second, the analysis of the cost data suggested that different jurisdictions may have different policies regarding the delivery of health care services. For example, it was found that the cost of care increased as the care requirements of the client increased in the Victoria site, a finding that is consistent with the case mix funding approach used in British Columbia. In the Winnipeg site, costs of care were relatively constant across all care levels, a finding that is consistent with the funding approach used in Manitoba. The results indicate that further research and clinical investigation are needed to examine how policy makers in all provincial and territorial jurisdictions in Canada develop and implement policies regarding care provision and funding.