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Executive Summary |
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Executive Summary: Institutional and Community-Based Systems For People With Mental Retardation: A Review Of The Cost Comparison Literature
Institutional and Community-Based Systems For People With Mental Retardation: A Review Of The Cost Comparison Literature by Kevin K. Walsh, Ph.D., Regina Gentlesk Green, R.N., and Theodore A.
Kastner, MD, MS with the support of May, 2002 EXECUTIVE SUMMARY [Note: This Executive Summary derives from a report submitted to VOR in September, 2001. A slightly modified manuscript has been submitted for publication]. A historical literature review of studies comparing costs of institutional and community services was carried out and found that, when all relevant costs are properly included and differences in the settings are taken into account, cost differences between community and institutional settings are minimal. From the studies reviewed here, it is clear that large savings are not possible within the field of developmental disabilities by shifting from institutional to community placements. The view of many in the mental retardation and developmental disabilities (MR/DD) service field that community services are inherently less expensive than institutions is not warranted for the following reasons: (1) the lack of comparability between community and institutional settings; (2) the possibility for the shifting of some costs in community settings to other federal and state program funds; (3) certain methodological problems in the research literature, and (4) the reduced staffing costs due to various factors (e.g., state-owned vs. private, rural vs. urban, etc.). In this study, over 200 published studies and documents of various types were identified, and a careful selection of a subset of peer-reviewed and often-cited studies were reviewed from both cost and methodological perspectives. The scope of the present literature review did not allow for the simultaneous review of research on the many clinical and quality of life outcomes, but noted the importance of including in policymaking consideration of a full range of individual outcomes. The issues that affect the interpretation of cost comparisons and their implications for public policy include elements of both the costs to the service systems as well as the quality of care received by the individuals being served. FINDINGS Clear-cut evidence was not found in the studies reviewed to support the unambiguous conclusion that community services are inherently less expensive than institutional settings. From the studies reviewed here, it is clear that large savings are not possible within the field of developmental disabilities by shifting from institutional to community placements. That is, the costs of residential care for people with mental retardation and related developmental disabilities, regardless of setting, involve a specific amount of resources that vary, somewhat predictably, with staffing levels, characteristics of those served, and other variables. The studies reviewed here that employed the most sophisticated and complex analyses and statistical comparisons generally tended to show the smallest differences across settings. With notable exceptions, few studies have been able to clearly aggregate costs in community settings while assuring comparability with cost aggregation in institutional settings. In fact, the shifting cost structures across settings, system changes occurring over time, and the heterogeneity of the populations served suggests that the more appropriate questions underlying public policy should not be generalized statements about cost-efficiency, rather, they should revolve around the individual and his/her needs: "What does this person need?" "Where best to provide for these needs?" and "At what cost?" FACTORS AFFECTING COST COMPARISONS The literature review outlined several factors that underlie variability in service costs in institutional and community settings: sources of funds, cost shifting, cost variability, staffing, and consumer characteristics. These factors were examined in selected peer-reviewed studies that have appeared in the published literature over the past quarter century. The first major influence identified was related to differences in the SOURCES OF FUNDS that support institutional and community facilities. Institutions are often paid for by a combination of state funds and federal Medicaid funding obtained through the ICF/MR program (Intermediate Care Facilities for Persons with Mental Retardation). However, community services are often funded solely by state funds, or by state funds augmented by federal Medicaid funds from the Home and Community Based Services (HCBS) waiver program. The differences in the two federal programs (ICF/MR and HCBS waiver) lead to the potential for the second identified influence, COST SHIFTING. Costs structures in institutional placements typically encompass more services within the funding model than do community services. Thus, for example, health care services are included in institutional models (i.e., there are staff physicians and nurses) that are not included community settings (i.e., health care services are accessed through Medicaid fee-for-service or Medicaid managed care systems). The literature reviewed in this study clearly supported the view that one of the most salient characteristics of nationwide cost comparisons is the extreme VARIABILITY both within and between agencies and service systems across states. A great many factors, some local, contribute to service cost differences. For example, in one of the studies reviewed here institutional costs were, on average, $40,000 more per individual in New Hampshire than in Nebraska and there was nearly a $19,000 difference in community costs between regions of Michigan and Nebraska. In a study conducted in the United Kingdom, researchers reported differences of as much as $20,000 between regular and specialized units within institutional settings. Such cost variability must be considered when cost comparisons are made. STAFFING effects have come to be understood as one of the major factors underlying the costs in service settings, often accounting for differences when they are found. Staffing variation in terms of number assigned, union vs. non-union, private vs. public employee and so on account for a great deal of variability in cost comparisons. The literature shows that a substantial portion of differences in costs are associated with differences in staffing costs. In short, differences arise in the fact that many institutions are publicly-funded and many community settings have been privatized. Finally, a factor that has been included only sporadically in the literature or, in some cases, not at all, has to do with the variability in the characteristics of those being served (referred to here as CASE MIX). Individuals with mental retardation and related developmental disabilities are quite heterogeneous with some individuals being nearly indistinguishable from people without disabilities to those who are quite disabled and dependent. Over the period reviewed, it has been typical for a higher proportion of individuals with mild disabilities to live in community settings while people with more complex needs requiring extensive care remained in institutional facilities. However, few studies adequately included these effects, or made appropriate statistical corrections when comparing costs. More recent research has begun to recognize the importance of these factors and to include corrections for case mix. METHODOLOGICAL PROBLEMS FOUND The complexity in the cost comparisons between setting types give rise to several recurring methodological problems in the studies reviewed. These problems include (1) the lack of comparability between groups based on biased, non-random or convenience samples, (2) the lack of adequate case-mix controls to control variability across samples, (3) differences in data collection and cost aggregation methods across groups, (4) the exclusion of critical categories of costs such as medical expenses, case management, start-up and capital costs, and (5) extreme variability in costs, cost shifting, and difficulties in applying statistical models to the data. The studies reviewed here document that the facilities, services, and populations between institutions and community placements vary to such an extent that comparisons between them as to costs need to take into account various factors and be conducted with great care using complex statistical models. Only a few of these studies, most notably those conducted in the United Kingdom, meet these criteria and they often show that community settings are not less expensive than institutional settings. As noted above, underlying any differences that are found are typically cost differences related to various staffing factors. CONCLUSION Historical claims that cost savings will be realized by shifting costs from institutional to community settings are not borne out by this review. This study showed that a variety of factors including staffing, consumer characteristics, sources of funds, cost shifting, and regional differences influence the actual costs of care. As indicated, the quality of care may also impact costs, although outcomes were not specifically considered in the present literature review. These findings should be taken into account by state and federal officials, other policymakers, advocates, and taxpayers. Further, accurate determination of actual costs should have implications on the appropriations necessary to ensure high quality care and supports, regardless of setting (institution or community). This review suggests that little or no cost savings are realized when costs of institutions and community settings are properly aggregated and compared. This finding implies that all involved should consider individual needs, preferences and choices as the primary considerations for placement decisions. |
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