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July 17, 2017

A provocative claim: End-of-life care accounts for only 'modest share' of medical spending, study says

Daily Briefing

Read Advisory Board's take on end-of-life care best practices

Though end-of-life care is often viewed as a significant contributor to U.S. health care spending, medical spending incurred during individuals' last 12 months of life accounted for a smaller share of total medical spending when compared with other countries, according to a study published Wednesday in Health Affairs.

Study details

For the study, researchers from several institutions around the world—such as the United Kingdom-based University of York, the Japan-based National Graduate Institute for Policy Studies, and the Denmark-based Aarhus University—measured medical spending that occurred during the last 12 months and three calendar years of life for people who died in 2011.

The researchers used data sets from 2009 to 2011 on individual-level medical spending from eight countries and one province:

  • Canada's province of Quebec;
  • Denmark;
  • England;
  • France;
  • Germany;
  • Japan;
  • Netherlands;
  • Taiwan; and
  • The United States.


According to the study, medical spending that occurred during the last 12 months of life comprised only a "modest share of aggregate spending, ranging from 8.5 percent in the United States to 11.2 percent in Taiwan."

The researchers found that such spending was lower than the percentage of medical spending that occurred during the last three years of individuals' lives, which ranged from 16.7 percent of aggregate medical spending in the United States to 24.5 percent of aggregate medical spending in Taiwan.

The researchers wrote, "This suggests that high aggregate medical spending is due not to last-ditch efforts to save lives but to spending on people with chronic conditions, which are associated with shorter life expectancies."

The researchers also found great variation across the regions in the types of medical spending that took place during the last three years of individuals' lives. For example, the researchers said certain countries spent more on long-term care during the last three years of individuals' lives, while others spent more on hospital care. According to the researchers, the greatest variation in spending in the final three years of life occurred among hospital spending, which ranged from 13.5 percent of total spending during the last three calendar years of an individual's life in Japan to 34.9 percent in Taiwan.

However, the researchers found that hospital spending typically represented a greater share of medical spending that occurred during the last 12 months of an individual's life. For instance, the researchers found hospital spending accounted for 44.2 percent of total spending during the last 12 months of an individual's life in the United States, compared with 36.3 percent of total spending that occurred during the last three years of an individual's life in the country.


The researchers said the findings suggests "that countries with stronger long-term care sectors tend to have less acute care spending, which might indicate some substitution of services across the two sectors." The researchers pointed to the Netherlands—which had relatively low hospital expenditures at the end of life, but higher spending on long-term care—as an example.

The researchers added that "while some terminal illnesses generate short periods of concentrated expenditure, many are the culmination of chronic conditions." Given those findings, and that "end-of-life costs account for a modest fraction of total medical spending," the researchers said U.S. policy measures to reform end-of-life care are unlikely to have a substantial effect on aggregate health care cost growth.

However, the researchers said end-of-life costs could be contained or reduced through "a multifaceted approach by policymakers and clinicians," which would provide people near the end of their lives the "appropriate mix of long-term care, hospice, and home care" and "would ensure that only those patients who wanted and needed to be in hospitals were treated there." The researchers said, "The primary payoff would be better quality care, along with modestly lower costs" (Haefner, Becker's Hospital CFO Report, 7/6; French et al., Health Affairs, July 2017).

Advisory Board's take

By Tomi Ogundimu and Deirdre Saulet

This study adds to the ongoing dialogue around end-of-life care in America, but spending is just one aspect of this issue. We can't forget about the importance of meeting patients' and caregivers' wishes for the end of life. In recent surveys, 90 percent of Americans said that they preferred to receive end-of-life care in their home, but only 33 percent of Medicare beneficiaries actually die at home.

Another study in the same Health Affairs issue found that only one-third of Americans complete any type of advanced directive. Notably, this rate didn't increase significantly when the authors looked at patients with chronic illness—in fact, only about 40 percent of cancer patients had completed an advance directive. To truly improve end-of-life care, providers need to prioritize these challenging conversations, make sure patients understand their prognosis, work with them to develop goals for their care, and respect those choices.

Given the increasing role that chronic disease management plays in patients nearing end-of-life, providers should also consider more innovative approaches to managing those with advanced chronic disease.

There's more of an opening for such approaches following CMS' expansion in July 2015 of the Medicare Care Choices Model, which allows terminally ill patients to continue receiving curative treatments while also qualifying for hospice coverage through Medicare. Such reimbursement models pave the way for providers to use concurrent hospice-like models of care, such as advanced illness management. These programs build upon the care management model to help patients with late-stage serious and chronic illness (and their families) make decisions about end-of-life care and ease the transition between curative and palliative care.

For more information on concurrent hospice models of care, download our research report, "Hospice Concurrent Care Opportunity Assessment." You'll learn five models for expanding concurrent care services to improve access, lengthen hospice stay, and increase patient and family satisfaction with end-of-life care.

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