Dementia costs surpass those of all other diseases

It is well known and documented that dementia has significant adverse effects on those who suffer from the disease. But it also can have negative physical and emotional consequences on family members, friends and even professional caregivers who witness patients' gradual cognitive decline. As if all this is not burdensome enough, the costs linked to dementia treatment appear to be some of the highest in healthcare overall.

"Health care costs for dementia found greater than for any other disease," a report published in the November 2015 issue of the Annals of Internal Medicine, summarizes a recent research analysis funded primarily by the National Institute on Aging (NIA). The study determined that during the last five years of dementia patients' lives, total healthcare spending was more than a quarter-million dollars per person. This is approximately 57% more than costs associated with death from other diseases. The new analysis estimates that total healthcare spending was $287,000 for those with probable dementia and $183,000 for other Medicare beneficiaries in the study.

Next: Cost Drivers

Cost drivers

Kori D. Novak, PhD, MBA, a researcher at Oxford University and a fellow at Stanford University School of Medicine, agrees with the study findings related to the high costs associated with dementia health management. "This is often due to the costs that many people are not prepared for such as extended homecare or dementia units in assisted living," she says. For example, the Alzheimer's Association estimates that semi-private rooms in an average nursing home cost $77,500 and private rooms cost $87,600 per patient per year-while basic services in assisted living average $42,000. "Further, it has been my experience that as the disease progresses, families also begin to incur additional costs such as time away from jobs, travel to and from the patient, counseling services, etc." Novak adds that in some cases, the healthcare costs to families with a dementia patient are almost double the costs for those with family members without a dementia diagnosis.

Mike Newell, RN, MSN, founder and president of LifeSpan Care Management, says dementia costs are high due to the burden of care and the fact that these individuals need constant attendance and supervision. "They are not safe to make their own decisions or direct their care, and the type of care required is not covered by health insurance or entitlements," he says.

Another reason for high costs associated with dementia may be because of its higher social impact factor, which is more than any other disease condition. Vivek Chail, MBBS, DMRD, DNB, general practitioner and radiologist from iCliniq, further explains, "[Because] it is a chronic condition which is slowly progressive and might occur over decades, this causes individuals to become more dependent on social support and rehabilitation services."

Next: Curbing costs

Curbing costs

Experts say there are some ways to reduce the costs associated with dementia. Novak believes one key lies with the sharing of resources, such as adult day centers or assisted living communities that have dementia units. "Making resources known to the medical community is one way we can curb the associated costs of dementia," she says. "In this way, physicians can refer newly diagnosed individuals to a social worker or to a place where the families can get information on the assistance they can receive."

She also says that costs can be better controlled for dementia-related medications. "Of course, this becomes entangled with Medicare, Medicaid, formularies, pharmacy benefits and private insurance companies. In the long-term, working with these entities may be the only way we can readjust the cost of care for this disease."

Newell contends that supportive therapies, which include early recognition and a “social” plan of care, may be the most effective way to reduce costs. "This would also consist of diagnosing the cause of dementia and treatment using supportive measures (e.g. ACE inhibitors for those with hypertension, diabetes, etc.) and social stimulation." He adds that the goal is to provide the patient with a safe, coherent environment and to proactively address any attendant health issues that would cause an expensive hospital admission.

Early diagnosis and global education are also within Chail's recommendation of how to address dementia's cost imbalance. "Creating awareness can go a long way in the detection of dementia at an early stage and starting appropriate treatment." He says that this will consequently reduce the long-term cost of treatment. "In addition, community participation and bringing together families of patients suffering from dementia can help exchange information and treatment awareness of the condition."

Rebecca Palm, chief strategy officer and cofounder of CoPatient (a healthcare expense management company), says that arranging for homecare is another cost-lowering mechanism. "Homecare is often the least financially draining option if there are appropriate safety measures and caregivers in place." She adds that many new technologies address the needs of dementia patients living at home. "Some solutions are simple, such as smart medication packaging and dispensing to simplify complex medication schedules and adherence. Others can perform advanced monitoring of the person's behavior and safety."

Next: Study highlights

Study highlights high cost of dementia

An October 2015 report, "Health care costs for dementia found greater than for any other disease," summarizes a research analysis funded by the National Institute on Aging (NIA).

The researchers used data from the Health and Retirement Study, along with linked Medicare and Medicaid records, to calculate the “social” costs of all types of care for 1,702 Medicare fee-for-service beneficiaries aged 70 years and older who died between 2005 and 2007. Patient records were divided into four groups: those with high probability of dementia; those with cancer or heart disease; or those with another cause of death.

The investigators calculated costs for patients from Medicare, Medicaid, private insurance, out-of-pocket and informal care over the last five years of life. Insurance, hospital, physician, medication, nursing home, hired helpers, in-home medical care and other expenses were the specific categories of spending included in the analysis. Here are some of the key findings:

• Although the average Medicare expenditures across all four disease categories were similar, almost all other costs were consistently higher for people with dementia. For example, with Medicaid, expenditures for patients who died with dementia averaged $35,346 vs. $4,552 for those without dementia.

• The dementia group had significantly higher enrollment in Medicaid at the start of the five-year study period (21%) than those who died from cancer (8%), heart disease (8%), or other causes (13%).

• Enrollment in Medicaid during the last five years of life also increased for those with dementia (27%) compared to those with cancer, heart disease and other causes (12%, 15% and 15% respectively). Out-of-pocket spending for families who had loved ones with dementia was $61,522 compared to $34,068 for those without dementia.

• Informal care costs were estimated to be $83,022 for people with dementia vs. $38,272 for those without dementia.

• In addition, out-of-pocket spending as a proportion of total household wealth five years before death was significantly higher (median of 32% for dementia and 11% for other diseases).