Reducing medical spending in the last year of a patient’s life isn’t a panacea for limiting growth in overall healthcare costs, according to a study published in the July 2017 issue of Health Affairs.
Led by University College London economics professor Eric French, the study used 2009-11 spending data for long-term care, home health, pharmaceuticals, professional services and hospital care from Denmark, Germany, Netherlands, United States and Taiwan. More limited data was utilized from England, France, Japan and the Quebec province of Canada. French and his coauthors estimated spending over the last twelve months and the last three calendar years of life, allowing an assessment of “the rate at which medical expenditures accrue and change in composition as patients approach death.”
The results found spending at the end of a patient’s life is modest relative to overall healthcare spending. It is also relatively similar across systems with very different regulatory structures. Mean per capita spending in the last year of life was high overall, with the U.S. being the highest near $80,000. What makes up that spending changes, however, across time periods.
“For example, in the United States hospital spending accounts for 44.2 percent of spending in the last 12 months, compared to 36.3 percent in the last three years. The share of hospital spending is even higher in the final three months of life, at 57.6 percent,” French and his coauthors wrote. “Compared to the last 12 months of life, in the last three years of life the share of spending on long-term care, which includes nursing home care, is higher.”
Despite end-of-life spending being relatively high, it still only accounted for 8 to 11 percent of aggregate medical spending. When factoring in spending for the last three years of a patient’s life, the percentage went up to 16.7 to 24.5 percent. In both time periods, the U.S. had the lowest share of spending even though its mean per capita spending over the patient’s last 12 months was the highest—showing that the country’s exceptionally high healthcare spending overall doesn’t translate into a higher share for end-of-life care.
The overall conclusion from the study is measures to reduce end-of-life spending are bend the cost curve in overall medical spending. For example, since spending in the final year of a patient’s life in the U.S. accounts for 8.5 percent of total health costs, initiatives to cut that spending by 10 percent would reduce overall spending by a paltry 0.85 percent, which French and his coauthors said would be quickly swamped by normal growth in healthcare costs.
“Reducing this spending would thus have only a modest effect on total medical spending,” the study concluded. “In contrast, spending in the last three years of life accounted for as much as 24.5 percent of overall costs, which suggests that the focus should be on reducing the costs of caring for people with chronic conditions—many of whom are approaching death.”