Reducing Nursing Home Use Through Community-Based Long-Term Care: An Optimization Analysis Using Data from the National Channeling Demonstration

A generally consistent finding of community-based long-term care demonstrations, including Channeling, is that these programs do not lead to net reductions in long-term care expenditures. Even though reducing nursing home costs was a goal of these demonstrations, none involved systematic managerial and resource allocation strategies specifically designed to research this goal. Rather, resource allocation decisions were left largely to the professional judgment of case managers. This study addressed whether long-term care resources can in fact be allocated strategically among clients to reduce nursing home use and costs. It made use of the techniques of econometrics and mathematical optimization to address this question, using data from the Channeling Demonstration. Essentially, the study found that higher skilled rather than lower skilled care in the community was a more cost-effective way to delay or prevent institutionalization. [35 PDF pages]