Synthesis of research on the costs of institutional and community-based care

Regular Articles

Synthesis of Research on the Costs of Institutional and Community- Based Care

Dale Mitchell, M.A.P.A. David Braddock, Ph.D. Richard Hemp, M.A.

Abstract

Cost studies in the long-term care field are reviewed, with emphasis on those relating to people with developmental disabilities. Studies frequently stressed the cost-effectiveness of community programs but often had significant methodological problems. Among the predominant findings in the literature were: l) the generally lower average costs per client in community programs versus institutional programs; 2) unexplained wide cost ranges in similar community programs ; and3) significant cost shifts among federal, state, and local governments associated with deinstitutionalization initiatives. The implications of these findings for public officials and the advocacy community are discussed.

Introduction

This summary reviews cost studies on institutional and community-based care for individuals with developmental disabilities. The synthesis draws upon general long-term care cost research, in addition to more specific research on costs of developmental disabilities services. We have been assisted greatly in this synthesis by comprehensive reviews previously conducted by the Center on Human Policy] by Macrosystems 2, and by reviews conducted in conjunction with the Pennhurst I~ngitudinal Study. TM

Included here are general conclusions/findings from these studies and indications of design problems in a number of those studies. Also reviewed here are possible factors which influence the cost of care, and suggestions for future research in the area.

Address correspondence to Dale Mitchell, M.A.P.A., University Affiliated Program in Developmental Disabilities, Institute for the Study of Developmental Disabilities, School of Public Health, University of Illinois at Chicago, 1640 West Roosevelt Road (M/C 627), Chicago, IL 60608.

David Braddock, Ph.D., is Associate Professor of Community Health Sciences and Director of the University Affiliated Program in Developmental Disabilities, School of Public Health, University of Illinois at Chicago. Richard Hemp, M.A., is Coordinator, Information Center on Financing Services, University Affiliated Program in Developmental Disabilities, School of Public Health, University of Illinois at Chicago.

Synthesis of Research MITCHELL, BRADDOCK, HEMP 171

Conclusions From Past Studies

Lower average client costs for community programs

Many studies in the past have concluded that community programs have lower average client costs when compared to institutional programs. However, some critics have questioned whether this general finding is misleading since a large factor in the lower costs of community programs is the diverse array of services provided in community programs. For example, Mayeda and Wais 5 observed that

...the cost of services to developmentally disabled persons in state hospitals do not differ significantly from the adjusted true costs of services in community settings provided both groups are provided with a full array of needed services (p. 4).

In addition, others have pointed out that the lower wage structure found in most community systems also contributes to the cost differential. Wieck and Bruininks 6 gathered cost information for over 200 public and private residential facilities. They concluded that while expenditures for non-personnel items were similar in public and private facilities, there were "dramatic" differences in personnel costs between the two settings. They also pointed out that most of this difference was due to "substantial variations" in the number, type, and frequencies of staff-intensive services rather than due to the differences in wages and benefits.

Similar findings were obtained by Conroy and Bradley 3 during the closure of the Pennhurst institution. While they noted that "the community based programs now serving the people who formerly lived at Pennhurst are less costly on average than those at the institution in terms of most cost measures," they also cautioned that "the cost differential can be traced almost entirely to differences in salaries and fringe benefits between the state employees at Pennhurst and the private employees in the community" (p.8).

However, not all investigators were in agreement with the suggestion that the cost differential between institutional and community programs was due largely to differences in salaries and benefits. For example, Heal 7 suggested that

...this [cost] difference is due to two fundamental and stable characteristics of the two systems. First, there is public versus private sector efficiency.., second, it is clear that there is a large number of individuals who get great satisfaction from working with developmentally disabled clients in community service settings. A part of their pay apparently consists of the intangible value of providing this service (p. 137).

Based on this, Heal concluded that there was "incontrovertible evidence that institutions are inherently more expensive than community services" (p. 137).

Investigators conducting general long-term care cost studies have also cautioned against the commonly held expectation that community alternatives are less expensive. For example, Kemper, Applebaum, and Harrigan 8 reviewed sixteen community "demonstration projects" for the elderly and found that only one project showed savings while all the rest either broke even or were more expensive. They concluded that "expanding publicly financed community care does not reduce aggregate costs, and it is likely to increase them--at least under the current long-term care service system" (p. 96).

Some investigators have suggested that the failure to show cost savings for community alternatives may be due to the inability to accurately "target" or identify those individuals truly "at-risk" of entering a long-term care institution. This inability to accurately target individuals has probably contributed to the federal government's reluctance to significantly expand the Home and Community Based Services (HCBS) Waiver program, (authorized by PL 97-35) as a non-institutional alternative under Medicaid. For example, Weissert 9 concluded that "most patients who use home and community care are using it

172 The Journal of Mental Health Administration 17:2 Fall 1990

as an add-on to existing care rather than as a substitute for institutional care...[the] vast majority of community care recipients were not at risk of institutionalization and would have stayed out without community care" (p. 425).

Yeatts, Capitman, & Steinhardt m reviewed home and community-based care demonstration projects of the early 1980s and found that "only 15% to 20% of those selected to receive services would have actually entered a nursing home without these services" (p. 652). There appeared to be a general expectation among some that improved "targeting" would have produced the expected cost savings. However, some investigators have expressed doubt whether improved "targeting" would produce different results. For example, Weissert 11 pointed out that "when community care programs target poorly, they have little chance of offsetting costs. When they target well, they may serve too few patients to make them viable" (p. 477). The thin line between effective sclleening and effective identification of sufficient numbers of "at-risk" individuals to make the program cost-effective seems to indicate that the cost-effectiveness of community programs with even superior targeting might be doubtful at best.

Kemper, Applebaum, and Harrigan 8 concluded that improved targeting procedures were not likely to reduce the cost difference since the "small reduction in nursing home costs for some people are more than offset by the increased costs of providing expanded community services to others who would remain at home even without expanded services" (p. 96): Greene j2 observed that "it seems doubtful that community-based long-term care programs in their present form can achieve simple monetary cost savings under any reasonable targeting assumptions since plausible screening accuracies appear to produce enrolled populations whose mean risk levels are well below individual threshold risk levels for cost-effectiveness" (p. 667).

In addition, as will be discussed later in greater detail, the finding of lower community costs has also been seriously questioned when design problems are taken into account. For example, Fujiura ~3pointed out that "costs are assessed without systematic consideration of the residents' characteristics...it is not clear whether the cost differences reflect greater economy in the community-based facilities or fundamental differences in service type due to selection factors in the placement of residents" (p. 229).

Large unexplained costs for "comparable" clients and "comparable" programs

Numerous studies have found unexplained large ranges of costs for supposedly"comparable" clients in "comparable" settings. For example, the New York State Commission on the Quality of Care for the Mentally Disabled ~4 found that the average patient cost in state institutions ranged from $40,201 to $106,356. In addition, a range of $16,892 to $57,600 was found in small community homes and apartments. Conroy and Bradley3 found a range of $99.74 to $208.94 per day within the institution and a range of $19.64 to $252.66 per day for community programs. In their own research on developmental disabilities residential and day programs, Ashbaugh and Allard ~s observed a similar unexplained range of costs and concluded that severity of client disability alone did not describe this wide range of costs. This type of finding serves as a reminder that these types of services often have wide variations and will not easily fit the traditional notion of"homogenous" products. For example, a "day of residential care" is not a well defined, uniform, or homogenous product.

Investigators have attempted to deal with this problem by developing "descriptors" that adequately define the "product" of service. Acknowledging this technique, Bishop t6 pointed out that "three types ofproductdescriptors have been used in nursing home studies: certified level of care, measures of service availability and intensity, and patient characteristics" (p. 51). Unfortunately, there are complex obstacles to developing this type of"descriptor." For example, level of care has been found to differ dramatically from state to state. A problem with using service intensity variables as product "descriptors" is an inability to distinguish between inefficient providers and those providing high quality care. Significant patient mix "descriptors" pose similar problems, as will be discerned later.


Cost shifts among levels of government

A third general finding evident in many studies has been that cost of care often shifted dramatically among different levels of government as individuals were placed from the institution to the community. In their review of financial costs for community-based care, Copeland and Iversen ~7 found a disincentive for most state and local governments to discharge clients from state institutions into community programs. Their analysis indicated that even when the overall cost of care for the client decreased after discharge to the community, the total expense for most states and local governments would increase because of Medicaid funding regulations. Conroy and Bradley 3 found similar results in their study of the Pennhurst closure. They observed that while the overall cost of deinstitutionalized clients was reduced from $129 per day for instituJonal clients to $110 per day for clients placed in the community, the costs for the federal, state, and local governments did not show a consistent reduction.

For example, the cost to the federal government decreased dramatically (from $70 per day down to $13 perday) forclients placed in the community while the cost increased significantly for both state (from $59 per day up to $98 per day) and local (from less than a dollar a day up to $3 per day) governments. A summary of the cost findings from the Pennhurst study is presented below:

Fund Source Institution Community

Local $14,308 $80,77 l State $1,498,671 $2,502,618 Federal $1,788,946 $236,469 TOTAL $3,301,925 $2,819,858 Ave. Annual Cost/Client $47,170 $40,284

Research at The University of Illinois at Chicago, University Affiliated Program in Developmental Disabilities~82~has documented the impact of federal funding on the maintenance of institutional settings, and the relatively small amount of federal support for small, community-based alternatives.22 The study's methodology consisted of the collection of state budget documents from the Council of State Governments in Lexington, Kentucky, and in Washington, DC, and from the Center for Research Libraries in Chicago. Budget documents were also obtained directly from the states, and extensive contacts with state officials augmented and confirmed data obtained from published sources. Fiscal profiles of each state and the District of Columbia encompassing the twelve-year period (Fiscal Years 1977-88) were developed.

A major finding of the study was the extensive federal Medicaid (Title XIX) support from the Intermediate Care Facility for the Mentally Retarded (ICF/MR) program devoted to large congregate institutions--84% of federal ICF/MR dollars in FY 1988. Braddock and Fujiura z3 found that there was a strong inverse relationship (Beta coefficient of-.653) between the extent of federal ICF/MR support and state funding for institutions. This fact has had significant implications in Congressional discussions of Medicaid Reform and the Community and Family Living Amendments. 24 The State Government analysis at the Illinois UAP also documented the continuing steady decline in average daily population of public MR/DD institutions. Furthermore, although there has been a recent increase in federal ICF/ MR support for small, community-based services primarily in the form of 15 bed or less ICFs/MR, and through the HCBS Waiver, there was corresponding decline in the level of federal support for community services from the Title XX/Social Services Block Grant.

174 The Journal of Mental Health Administration 17.'2 Fall 1990

Design Problems of Past Studies

Calculating costs

One of the major design problems of past studies was related to the method typically employed by investigators in determining costs of both institutional and community programs. For example, most studies have utilized "average per diem" costs in determining the cost of care for individuals living in institutions. However, Bradley and Conroy 4 noted that

...the overriding weakness afflicting all of the institutional versus community program cost comparisons to date has been the use of a single cost per client figure to represent the costs of the institutions under study.., many institutions today can and do offer a variety of programs to a variety of clients at wide ranging costs. The average cost per institutional client is an imprecise and meaningless figure for rational decision-making (p. 216).

They also observed that institutional costs were often dominated by the clients with more severe disabilities, thereby skewing the per diem figures. In addition, Conroy and Bradley 3 pointed out that community budgets usually excluded such costs as case management, medical care, public assistance, day programs and "hidden" costs such as municipal and/or state administrative support, the effects of the calculation of depreciation (amortization of capital costs), and interest expenses. Other related "hidden" institutional costs which were frequently ignored included state capital bond costs, and spend- downs and asset reductions by individuals served prior to their Medicaid eligibility.

Fujiura '3 pointed out that capital costs are often ignored for institutional programs while community facility estimates "routinely" included rent. He also observed that very few researchers have attempted to control how resident characteristics may influence costs and suggested that the primary problems involved in identifying and measuring costs are: l) lack of standardization of terms; 2) differing depths of detail in analyzing costs; 3) categories often left undefined; 4) lack of consistency in perspective taken; 5) failure to consider capital costs; and 6) failure to consider generic costs outside the facility budget.

There are other issues for investigators to consider when conducting a cost-effectiveness study on long-term care. Heal and Laidlaw 25 pointed out the different accounting methods which make it difficult to compare studies, citing five general problems: 1) capital costs are inconsistently separated from operating costs; 2) costs of domiciliary services are not ordinarily separated from operating costs; 3) economic benefits of gifts and volunteer labor are seldom taken into account; 4) contributions made by the individual to his or her own domiciliary services are not usually separated from contributions made by society; and 5) the economic benefit of clients' labor is seldom taken into account.

Comparisons between cost studies are also difficult because of problems in definition of cost units. Fujiura 13 suggested that a partial solution to this problem would be the utilization of an "individual accounting" approach. He pointed out that this method would "force the investigator to identify more accurately all sources of expenditures" and the results would be "less vulnerable to contamination by selection bias" (p. 237).

In addition, there are often many generic community services unaccounted for. This has usually occurred due to the fact that some community services were hard to track down and some items (such as Medicare/Medicaid services) were easier to document. Kotler, Wright, Jaskulski, and Kreisberg 2 found that "two studies done on Califomia...suggest that the total bill for non-Medicare/Medicaid services may be substantial, particularly for MR/DD clients' (p. II-17). But they also noted that even federal funding such as Title XX, income maintenance, federal Department of Housing and Urban Development (HUD) "Section 8" rent subsidies, and vocational rehabilitation were often omitted because of the difficulty in tracking them.


Controlling for client mix

Some critics of cost research have suggested that a major difficulty in making comparisons of cost studies results from inadequate control of the population characteristics of the individuals being studied. Even in the Pennhurst study, where considerable energy was invested in an attempt to minimize this problem, the authors conceded that as time passed the community clients became less representative of the institutional population. Fujiura ~3 suggested two methods to minimize potential "selection bias." The first was the employment of "matched samples in a posttest-only design" and the second was an "assessment of costs before movement in a pretest/posttest design" (p. 231). In addition, Eastwood and Fisher 26 suggested that past researchers have not been comprehensive enough in their utilization of the "matched comparison" technique as a method to minimize sampling bias. In a review of the literature, they found 15 variables (e.g. level of mental retardation, secondary disability, sex) which they felt should be controlled for, and concluded that "matching on these variables greatly reduces the bias in the estimates of the effects of community placement" (p. 79).

However, there has not been universal agreement on the importance of case mix in predicting services costs. For example, Bishop 16 pointed out that the increase in cost does not necessarily increase proportionately with clients' needs and that "even a 'perfect' index that correctly ranks patients from least to most needy might not effectively hold case-mix constant, and is unlikely to capture accurately the effect on cost of case-mix differences" (p. 56). In addition, she concluded that "since patients will tend to appear with certain clusters of diagnoses and dependencies, the use of all information will include redundant variables, making it difficult to estimate the independent effect on cost of any one patient characteristic" (p. 56).

In an attempt to study the impact of patient characteristics on cost, Cbnroy and Bradley 3 observed that "the four client variables--adaptive behavior, maladaptive behavior, age and medical need-- believed to be indicative of client service need and of the intensity of staff support required, were found to explain only 23.8% of the variation in program costs per diem." They therefore concluded that "a relatively small percent of the variation in program costs seems to be explainable in terms of client- specific variables" (p. 242).

Lakin, Hill, and Bmininks 27 have also cautioned against placing too much reliance on case mix. Although they agreed that it was desirable to be able to define a"marginal cost" associated with treating different "kinds" of residents, they also pointed out two problems with this concept. The first problem was the difficulty of determining what portion of this difference was due to variations in quality rather than differences in either "products" or in client mix. The second problem was that many of the case- mix variables were likely to be so closely inter-related as to make it difficult to isolate predictive variables. In addition, Schlenker 28 has concluded that once a certain level of dependency was reached in terms of ADL level, further dependency increases did not increase cost as much as the initial dependencies did.

Uniqueness of study conditions

Another problem encountered while attempting to make comparisons and generalizations among various studies has been the uniqueness of many study methodologies and situations. For example, Conroy and Bradley 3 cautioned that the results of the Pennhurst study might not be representative of national conditions since both the institutional and community per diem rates in the Pennhurst area at the beginning of their study were well above those for the rest of the state and country. In addition, many studies have failed to gather longitudinal data on client costs. Kotler and his colleagues 2 concluded that "available evidence suggest...that time has a significant impact on calculated costs" (p. II- 18).

Another factor that has made calculating comparable costs difficult is the fact that, in many areas, costs are not based on "true market conditions" but rather on what current public policy and the existing regulations (funding mechanism, certificate of need, etc...) will allow. Bishop ~6 concluded that "ob-


served costs and variation in product and provider type emerge from a complex system, shaped by reimbursement practices, quality standards and other State specific policies, and by private demand conditions" (p. 60). In addition, Kotler et al. 2 pointed out that "in a mixed population of public and private-pay clients, the latter often subsidize the former...research on state rate regulation in the health care industry demonstrates that length of stay, expenditure per day, and utilization all systematically shift from state to state with changes in regulatory environment" (p. III-2).

Factors Which Influence the Cost of Care

Start-up costs

One of the factors affecting the cost of community care is the increasing unit costs of community programs which often accompany deinstitutionalization movements. Kotler et al. 2 observed that"there is some evidence that the traditional laws of demand and supply do indeed hold in a market for services to disabled and infirm persons" (p. II-11). However, they were not able to determine whether this cost increase was temporary or whether a "supply response" would force prices back down to a "lower equilibrium." In both Pennsylvania and New York, rapid deinstitutionalization efforts under court orders caused a rapid cost increase for community care. Conroy and Bradley 3 noted that the attempt to expand the community residential system in Pennsylvania meant that "the need for large capital outlays for construction or renovation eliminated many of these agencies at the outset" (p. 15). They also observed that the medical orientation of the regulations was a disincentive to many providers.

Another factor that may contribute, at least initially, to higher start-up costs is high fixed costs in relation to low initial volume. Conroy and Bradley 3 found that "a program in its first year of operation could be expected to cost an average of $8.73 more per day than programs in existence for more than one year" (p. 230). This could happen because many new programs might initially be uncertain about resource needs and might overestimate the resources they require. In addition, there may also be a decrease in administrative costs over time as staff become more efficient and gain experience.

The fact that initial costs can be higher reflects the need to develop an "infra-structure" of services in the community. Because commtmity-based services generally consist of more individualized and more localized services such as group homes and in-home support services, there must be community- based administration, case management, and other services to support individual providers. Needs assessment, program development, the establishment of comprehensive reimbursement models, program monitoring and quality assurance represent necessary components in a community-based system, and each must be considered in the assessment of comparative costs.

While some costs may decrease over time, there is evidence that some costs may increase. For example, personnel costs for many community programs are initially kept relatively low because of low wage scales. Kotler et al.2 pointed out

...there is some doubt, however, that these low-wage sources of care can be substantially expanded without exhausting the pool of those with the training, ability, and temperament to provide quality care at low effective wages. As the pool dwindles, upward pressure on the real wages required to secure adequate personnel is a likely scenario (p. II-13).

In addition, changes in an individual's functioning or in his/her needs for services may mean a difference in the amount and intensity of resources needed. Researchers should avoid a "snapshot" approach when calculating costs.

Another unexpected cost found to be associated with some new community programs is caused by the filling of previously unmet demand. This "latent" demand is usually encouraged directly by increased case-finding and outreach efforts or indirectly through increased publicity conceming the existence of community programs. It is not clear whether this increase in demand is a one-time surge


associated with initial screening activities or a continuous program result. Some states have found lower average client costs for selected community services but at the same time have acquired a larger caseload--resulting in overall increased expenditures. In addition, there may be overall increased costs associated with the substitution of community programs for previously donated care provided by the families.

Faci l i ty/program size and scale

One of the popular notions often cited by critics and advocates of community care alike is the cost associated with economy of scale. Although there has been a general belief that cost usually increased as the size of the program decreased, this assumption has received closer scrutiny. For example, Bishop ~6 pointed out that"some researchers have shown average costs to increase as the number of beds increases, while others show declining costs" (p. 50). In their review of the literature, Kotler et al 2 did not find conclusive evidence to support or disprove the economy of scale theory.

Suggestions for Future Research

Use of established health care cost research

Kotler et al 2 suggested that future studies should more frequently utilize methods used in"traditional" relevant health care cost research. They pointed out that many of the methodological issues found in comparing institutional and community-based care have been addressed before in other literatures, and suggested that future research in the field of developmental disabilities could borrow from successful methodological models developed for hospitals and nursing homes without danger of undue influence of the "medical model."

In addition, they recommended that adequate advance planning be done by the researcher prior to commencement of the study. For example, the principal investigator should ensure that members of the research team are familiar with literature on health care cost research. Fujiura '3 had similar concerns when he pointed out that "analysis of unit costs requires a level of record keeping detail not available in a retrospective study" (p. 237) and would involve considerable advance planning.

Development of outcome measures

The measurement of program quality and effectiveness becomes crucial when attempting to compare costs between otherwise "comparable" programs. For example, if the costs of two programs differ substantially due to significantly different arrays of services provided, the researcher must be concerned whether this cost difference is due to a more efficient use of resources or inadequate programming on the part of the provider. It is very important that relevant predictors of quality be identified for use in cost studies. However, this will be a formidable task as there is common agreement that assessing quality of health care is a multidimensional and complex process. A brief review of past quality assurance efforts and philosophy in the long-term health care field will be helpful to investigators conducting cost- effectiveness studies in the field of developmental disabilities. Donabedian 29 in his classic work on quality assessment, maintained that there are three key components to consider when assessing quality of health care: structure, process, and outcome. He concluded that there was a dynamic relationship among them, and noted that while structure is only an indirect indicator of quality and not as important as the other two components, it can increase or decrease the probability of delivering quality care. Donabedian claimed that outcomes were more important than structure in assessing quality of care but usually not as important as process. He suggested that once certain process factors had been clearly


associated with good results in the past, these factors should be accepted as signs of quality, or lack of quality.

Many professional groups and researchers were willing to accept Donabedian's assertion that process should receive priority over outcomes in quality of care assurance reviews since measuring process variables was usually less threatening to professionals in the field and usually more in line with their own professional philosophy. However, recently there has been increased discussion about the proper mix between process and outcome components. For example, during the past decade, professional groups such as the Joint Commission of Accreditation of Health Organizations (JCAHO) and the Accreditation Council on Services for People with Developmental Disabilities (ACDD) have placed a higher priority to outcome measures in the revision of their published standards.

In the past, federal and state regulatory agencies were often criticized for emphasizing the structure and process components in their quality assurance efforts while giving little or no attention to client outcomes. The Institute of Medicine 3~ observed that "the practices of the regulatory system and the nursing home industry in general have not been up to the state of the art for some time (p. 56)....a new quality-of-care condition is needed that has both process and outcome standards" (p. 83). At the same time, HCFA was unsuccessfully defending its PaCS (Patient Care and Services) system for nursing homes in federal court. The federal government was directed to develop a more outcome orientated survey process for assuring the delivery of quality care to nursing home residents.

The HCFA also came under attack in the developmental disabilities field for some of the same problems noted above regarding nursing homes. Partially in response to this, the federal government 3' issued new regulations in 1988 for the ICF/MR program, stating that"our experience with the ICF/MR regulations...has provided sufficient evidence of the failure of essentially prescriptive, process orientated regulations to work effectively in behalf of the developmental, health, social, and behavior needs of clients" (p. 20449). HCFA pointed out that "throughout the regulations, we have emphasized the importance of results and outcomes, and have placed minimal importance on required processes."

In addition, researchers in the quality assurance field have also re-examined their own beliefs concerning the proper roles of process and outcome measures in measuring quality of care. Lohr 32 observed that neither process nor outcome measures should be used solely to evaluate quality. Donabedian 33 retreated from his emphasis on the 'process' component when he observed that"it is quite inappropriate to say that either process or outcome is inherently preferable to the other...as a general rule, however, it is best to include elements of structure, process, and outcome in the assessment" (p. 179).

Some professionals and researchers have become concerned that the swing of the pendulum in favor of outcome measures is in danger of swinging too far. Kane and Kane 34 warned that "for some elements of care, the manner of delivery is as important as what is accomplished" (p. 138). Wyszewianski 35 reminded that "outcomes ...are indicators of quality of care only if they are attributable to process and structural elements, rather than being the result of genetic, environmental, or other factors" (p. 16). He also observed that the success ofJCAHO's new emphasis on outcome measures "will depend on whether outcomes simply take the place of structure as the almost exclusive preoccupation of JCAHO assessments, or whether instead the process and structure elements that underlie the outcomes are given their due" (p. 16).

Kane and Kane 34 wamed that many in the health care field were taking an overly simplistic view towards the future utility of outcome measures and that "it may prove impossible to simultaneously maximize comfort, safety, improved functioning, cognitive functioning, and social functioning...rhetoric about the 'quality of care' often implies that it can be managed by superimposing additional goals onto a safety-oriented medical review of quality of care rather than by rethinking the entire concept of quality (p. 136)." In addition, Wyszewianski 35 cited the need for the press, the public, and politicians to feel confident about the quality of long-term care.

This widespread need for reassurance has created a pressing demand for measures of quality that are readily obtained and can be easily understood. No one claims such measures


exist. But some believe that this cannot be told to the groups most concerned about it because it would reinforce their worst fears. One response, therefore, has been to cast about for simple, understandable measures, such as hospital mortality rates, trying to overcome some of their limitations as indicators of quality while being willing to overlook any remaining inadequacies. The opposite response is to dissuade the groups from their quest by insisting that no one knows how to define, much less measure, quality of care, because health care delivery is such a complex, unpredictable, almost mystical enterprise (p. 14).

While quality is an important consideration, investigators must be careful not to allow it to assume a disproportionate role in the study. For example, Ullman 36 concluded that

...there is no empirical evidence that a significant positive relationship exists between facility quality and facility costs...although profit maximization requires cost minimization, the latter does not necessarily translate into quality minimization for those aspects of quality that have the greatest impact on resident life...quality, in many respects, may be a function of staff and administrative attitudes]factors which may not be strongly related to costs...it is likely that nursing quality and rehabilitation quality are related more to the attitudes of therapists, nurses, and aides in their day-to-day dealings with the resident load, rather than facility expenditures on these programs (p. 31).

In addition, past attempts to inject quality of care factors into cost studies have often met with various problems. For example, although Paul 3v pointed out that "the money and staff time devoted to information gathering, documentation, and processing practices in residential treatment facilities...represent substantial ongoing direct and indirect costs in current operations," he has also observed that the "information typically provided has unknown or questionable replicability, low representativeness...and little relevance to nearly all decision problems for which information is needed" (p. 185). Paul discussed the need to implement and maintain a "comprehensive paradigm" which will allow the development of "principles and methods to support cost-effective quality operations" in residential settings. Although Paul admitted that his recommended "paradigm" represents "revolutionary and unfamiliar departures from current practices" (p. 189), he also predicted that such a course would result in overall cost savings.

Use of standardized statistical analysis

Many critics of comparative cost methodologies have pointed out the difficulty, if not impossibility, of ensuring comparable subjects over time in both experimental and control groups. In order to minimize this possible "selection bias," Kotler et al.2 have recommended that researchers complete minimal preparations before conducting any study. For example, they suggested that necessary assurances of access to individual client data and living area costs should be obtained, instead of just obtaining general facility or provider costs.

It is also important that future research employ established statistics including tests of significance, confidence intervals, and multivariable techniques in analyzing data obtained in cost studies. Kotler et al. 2 suggested that"what may be most important in determining cost is not a single variable but the joint occurrence of two or more traits" (p. II-10). In addition, they concluded that "the literature reviewed contains evidence that cost is related to severity of illness or level of disability but that the relationship is consistently neither linear nor monotonic...costs may be sensitive not to average values but to extremes" (p. II-10). They also observed that "theory and existing evidence...strongly indicate the possibility, if not probability, of highly nonlinear relationships between costs and important conditioning variables (p. III-15).


Utilization of research results

There is often a temptation for policy makers and other concerned individuals to use results of cost studies for purposes that are not always appropriate. For example, Kotler et al2 pointed out that there is

�9 ..a common tendency...to push the average cost estimates further in discussion of policy conclusions than the concept measured will allow...average total cost cannot be used to project the fiscal implications of expanding community care programs. They cannot be used to estimate the savings realized by further curtailing the volume of institutional care. They provide misleading guidance as to the future impact of total long-term care costs (p. III- 16).

Weissert 9 pointed out that"the real problem for community care is that its promoters sold it as a cost- effective alternative to nursing home care. An alternative rationale would be simply to acknowledge that community care is a new service directed to a new population" (p. 431). Conroy and Bradley 3 recommended that "advocates wishing to promote community programs are probably best advised to cast their arguments in terms of 'getting more direct care staff time for the dollar' than the overly simplified 'community programs are cheaper' rationale" (p. 241). Leutz 38 cautioned that "we need to stop hiding the true costs of expanded community care and start finding a rationale for bearing those costs...the immediate task of community care advocates is to affirm that valuable and viable outcomes can be achieved, to show that costs are predictable and controllable through improved norms of practice, and finally to convince the public and policy makers that the product is worth the price" (p. 139).

In addition, it is important to remember that the costs of operating a "dual system" of care can be misleading. Knoll and Bersani 39 observed that "costs in the current system (a dual institutional/ community system with an institutional bias) may not reflect the actual costs to be achieved in a full community service system. The cost of offering individualized supports as an exception to the rule is likely to be more expensive than offering the same services as a part of a well-developed community delivery system" (p. 14).

Conclusion

Ideally the cost of services should be secondary to the needs of the individuals being served. Numerous court decisions have emphasized this fact when issuing their ruling (e.g. Mills vs. Board of Education and Pennsylvania Association for Retarded Children (PARC) vs. Pennsylvania). However, it is naive to expect that the cost of services will not be carefully considered by public officials during the expansion of community service systems in each state. For this reason, it is crucial that researchers be cautious when conducting future studies on the costs of community services. For example, the true costs of community programs can't be accurately calculated without consideration of what the full array of needed services for individual clients are. Researchers have frequently assumed that all client needs are being met by the community programs they are studying. In addition, the impact on cost of a dual system of institutional and community services in transition must be recognized. Cost for a specific service in an underdeveloped community system will often be higher than the cost for the same service in a more mature system. Future research should focus on identifying all "hidden" costs and minimizing the difference between institutional and community programs for variables such as client mix services provided, and needs of the individuals being served.


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Synthesis of research on the costs of institutional and community-based care

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