April 25, 2024


Make Every Business

The rise of hospital at home

Mark Larson, principal of Sg2, a consulting and analytics subsidiary of Vizient

Photo courtesy of Sg2/Vizient

Hospital at Home, a trademarked name of Johns Hopkins Medicine, has been in practice in that health system’s hospitals since at least 2002. The concept is not new, but, like telehealth, at-home hospital-level services became a necessity for all health systems when acute-care beds filled during the first surge of the COVID-19 pandemic. 

“A lot of hospitals were at capacity,” said Mark Larson, principal of Sg2, a consulting and analytics firm and Vizient subsidiary.

Hospital at home became a concept that found itself in the right place at the right time, he said. Hospitals saw that hospital at home worked so well, both for the patient and for the economic benefits, that the model is being pursued beyond the pandemic.

There are many hospital at home services, from urgent care, to skilled nursing, to home infusion services. But acute care at home has received the lion’s share of attention from health systems.

“Interest has just been unbelievable,” Larson said. “There’s lots of discussion. Five to seven years ago, it was really in its infancy.”  

Hospital executives must first evaluate whether hospital at home for acute-level services is a good fit. Patients must be evaluated to determine if a support system exists in the home environment. At-home care may not be a good fit for patients who have social determinants of health issues or who live alone.

Hospitals must already have, or be willing to invest in skilled nursing staffing, physician telehealth and other technologies to coordinate the delivering and sequencing of services, supplies such as oxygen, and nursing schedules.

“Everything has to be delivered at the patients’ doorstep at the right time,” Larson said. “Hospitals have to become powerhouses. They need to have the tech and operational capacity.” 

Larger health systems have an advantage, because they tend to have a strong home health capability already, and know how to deliver the care.

“Larger organizations have a bigger opportunity to achieve scale,” Larson said. 

Academic hospitals especially see it as an alternative to the more expensive alternative of building new bed space. UMass Memorial Health is one academic system that launched a hospital at home program this year.

Hospitals still operating mostly on fee-for-service will not do as well as those that enter value-based contracts. Research has shown, Larson said, that for an acute-care episode, hospital at home doesn’t save a lot of money. It’s when the contracts are extended to the 30-day episode in Medicare Advantage agreements that ROI is realized. Even more money is saved on avoiding readmissions.

Larson said Sg2 has seen organizations come in to do the contracting in partnerships between health systems and payers.

“If there’s one big takeaway, for the right organization, it’s a very nice fit,” Larson said. “Everyone is evaluating.”


“The advantages are definitely the economics of it,” Larson said. “It provides the opportunity to decamp hospitals at capacity.” 

There is a financial advantage – Larson estimates a $3,000 contribution margin – if hospitals can backfill a lower-acuity patient from the hospital to the home, for a patient with a higher acuity-level and higher margin. The second advantage is providing an alternative avenue for hospitals to participate in value-based arrangements, especially with Medicare Advantage payers.

Thirdly, patients want it. A Sg2 survey shows that if given the choice between having inpatient-level care at home or in the hospital, 61% would choose to be at home.


From an investment perspective, care is shifting.

Overall, the need for inpatient care is growing because of aging baby boomers and the rising number of patients with chronic conditions. The length of stay is projected to grow over the next 10 years, according to Larson. 

During the COVID-19 public health emergency, the Centers for Medicare and Medicaid Services is reimbursing for hospital at home acute-level care and has a list of appropriate DRGs. In general, these are diagnoses that are medical in nature, with lower acuity, and not post-surgical care, according to Larson.

Like telehealth, CMS is reimbursing for this care during the PHE. Once the public health emergency ends, CMS will be evaluating these services for the future.

Twitter: @SusanJMorse
Email the writer: [email protected]