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Mar 2018

The Life versus Healthy Life Expectancy Gap Impact on Provider Balance Sheets

Various advances in medical science have contributed to an increase in life expectancy in the United States and other developed nations.  According to multiple sources, life expectancy in the United States is approximately 79 years while in the United Kingdom it is close to 82 and in Japan almost 84.  Many  studies estimate that these trends will continue and that children born today could easily have a life expectancy of 100 years.

At first glance, this appears to be great news.  Even if people delay retirement, they can still expect to live another 20 years or more.  But before having images of happy seniors enjoying their now-longer golden years, there is another statistic that needs to be considered.  And it is one that has far-reaching implications for the nation’s healthcare providers.  What is it?

While people are indeed living longer, this extended life expectancy does not mean that they will have more healthy years

What is in fact happening is that people are living longer and most of those additional years are being lived under the shadow of having to deal with multiple chronic diseases.  According to the CDC, only 41 percent people over the age of 65 report being in good health.

What this Means

There are a variety of age-related acute and chronic diseases that will undoubtedly continue to increase in frequency as more people live longer. These include heart disease, cancer, arthritis, cataracts, osteoporosis, depression, poor oral health, COPD, dementia and Alzheimer’s disease, diabetes, and obesity. The incidence of these diseases tends to increase exponentially with age.

To give an example, dementia and Alzheimer’s disease are expected to double every 20 years as life expectancies continue to increase.  In fact, studies now show that almost 90 percent of all deaths in the developed world are caused by age-related causes. That is an astounding statistic!  One result of this is that while the U.S. enjoys one of the highest life expectancies in the developed world, it is not in the top ten countries with the longer healthy life expectancy (Japan and Singapore are the top two).

The impact of this shift on the economics and spend in healthcare is very clearly being seen.  According to the Centers for Medicare and Medicaid Services,  healthcare spending on seniors is disproportionate to the percentage they represent in the overall population.  And according to studies by the U.S. Department of Health and Human services, elderly patients are among the top 10 percent of healthcare spenders.

The Challenges to the Healthcare System

Given these statistics, it’s clear that increased life expectancy without a corresponding increase in healthy life expectancy will place a financial and operational burden on the nation’s already over-burdened healthcare system. These include:

  • Increasing demand for specialized health care workers and especially those skilled in gerontology and related fields. There currently are fewer than 10,000 practicing geriatricians in the U.S. and demand for this specialty is expected to grow to over 36,000 by 2030.  This demand could create upward salary pressure and impact ongoing care.
  • A larger universe of older people with multiple chronic diseases requiring ongoing care will place capital, operational and financial demands in the Skilled Nursing Facility (SNF) sector. These facilities are already facing significant financial challenges with the current increase of patients requiring specialized care, such as for obesity or diabetes. These challenges could place many in a precarious financial condition.
  • Government and private sector spend on healthcare will continue to increase disproportionately to other expenditures and, if current trends continue, at cost increases higher than inflation. In the U.S., for example, someone turns 60 years old every eight seconds. This increase can rapidly outpace government and private sector ability to pay for required health care services.

What can Healthcare Providers Do?

The first thing healthcare providers can do is help their own staff and local communities stay healthier longer in order to delay or prevent the onset of age-related diseases. This would include being proactive in educating patients and the community about good nutrition, exercise and lifestyle changes (such as quitting smoking) and the role these play in getting and staying healthy.  They also can lead by example by removing junk food from cafeterias and hospital gift shops and substitute them with healthy foods as well as launching or expanding employee wellness programs and implementing ongoing educational programs.

Healthcare providers can also perform a review of their financial and operational systems to appropriately account for this patient population.  This includes utilizing necessary financial forecasting to account for the increased costs associated with those patients presenting with age-related diseases and often with multiple co-morbidities including obesity and diabetes.   Providers should also consider negotiating reimbursement rates that will result in more reasonable compensation for medically necessary services for these older patients.

Finally, healthcare providers, and especially those associated with teaching and research institutions, can be more involved with research into the causes of age-related diseases and especially the development of multi morbidities.  There is much research on specific age-related conditions, all of which are making a major difference in peoples’ lives, but since most older people suffer from multiple diseases, this type of research may go far in helping close the healthy life expectancy and life expectancy gap.  Perhaps taking this type of action will create a ‘win-win’ for everyone.

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