Virtual Hospital-at-Home Program Cuts Costs but Needs Payment Reform

All-virtual, at-home acute care programs can lower costs for hospitals and payers, but broader adoption may require changes to reimbursement policies, according to a new study published in JAMA Network Open.

Hospital-at-home care delivers medical staff, equipment and treatments—such as IV infusions—directly to patients’ homes.

In the U.S., Medicare requires two in-person visits per day for reimbursement, which can be difficult to fulfill in large or high-traffic areas, according to study authors.

However, the UK’s National Health Service has increasingly relied on virtual care to replace hospital stays, the report shared.

Hospital-at-home programs have gained significant traction nationwide in recent years.

According to a 2024 report by the American Hospital Association (AHA), over 300 U.S. hospitals launched hospital-at-home initiatives following emergency waivers during the COVID-19 pandemic that allowed remote care reimbursement.

These programs showed benefits such as reduced hospital crowding and lower infection risks.

However, many now face financial uncertainty as these temporary payment flexibilities expire, putting the future of virtual acute care models at risk.

This matter highlights the urgent need for permanent reimbursement reforms to take place and expand hospital-at-home care across diverse healthcare settings.

At Los Angeles General Medical Center, a large public safety-net hospital, primarily researchers from the hospital and other surrounding health centers developed a fully virtual hospital-at-home model called Safer@Home.

Over 300 U.S. hospitals launched hospital-at-home initiatives following emergency waivers during the COVID-19 pandemic that allowed remote care reimbursement.

The program was designed around growing evidence that many patients with acute illnesses can be safely treated at home with oral or inhaled medications and remote monitoring, without the need for intravenous therapies or inpatient care.

Safer@Home enrolled patients who would have been admitted to the hospital.

Eligible patients were medically stable, able to take medications at home and had a working phone and discharge address.

Care was provided virtually through daily check-ins by nurses and hospitalists, supported by remote vital sign monitoring and occasional in-person urgent visits if needed.

During its first year, the program served 876 patients and demonstrated a four-day reduction in hospital length of stay compared to 1,590 matched inpatients.

There was also no increase in death or 30-day readmissions, which suggests the model was both safe and effective.

In this study, researchers focused on evaluating the program’s financial impact.

It was found that hospital costs were lowered by reducing inpatient stays—each day in the hospital cost an average of $2,945 in variable costs.

Safer@Home introduced new fixed costs for staffing and home equipment, totaling roughly $848,000 for the year.

Overall, the hospital saved an estimated $5.6 million—about $6,392 per patient—by avoiding 3,504 bed-days.

However, the program also resulted in $4 million in lost hospital revenue due to fewer inpatient admissions. The financial outcome depended heavily on the patients’ insurance status.

Because Los Angeles General serves a high proportion of uninsured and Medicaid patients, the lost revenue had minimal financial impact.

For these groups, the hospital still saved an average of $8,380 (Medi-Cal) to $10,934 (uninsured) per patient, according to the study.

In comparison, treating Medicare patients through the program resulted in a $4,143 loss per patient, while losses reached nearly $26,000 per commercially insured patient due to the high reimbursement rates hospitals receive for inpatient stays.

Researchers modeled what would happen if the program were implemented at a hospital with a more typical payer mix, including more patients with Medicare and private insurance.

In that scenario, the hospital would lose over $11 million for every 1,000 patients unless reimbursement models were adjusted.

Even halving the proportion of commercially insured patients did not eliminate the financial loss.

To break even, the researchers estimated that hospitals would need reimbursement of approximately $13,198 per patient.

Depending on the institution’s specific cost structures, this break-even point could range from $5,300 to $21,000.

On the payer side, the program delivered significant cost savings.

It reduced hospitalization costs by 55% to 58% and by over 65% when adjusted for quality of life.

The model remained cost-saving for payers even if they reimbursed up to 67% of traditional inpatient costs, meaning that all-virtual hospital care could be financially viable with the right policies in place.

Based on the extensive findings, the study’s primary strength results in its evaluation of a fully virtual acute care model, showing it can reduce costs while maintaining safety.

However, the study had several limitations.

Because the hospital does not use line-item billing, cost estimates were based on average variable costs and not tied to individual patients, which may have overstated savings.

In addition, the findings may not be applied completely, as Medicaid payment methods vary by state, and few hospitals have payer mixes similar to Los Angeles General.

The authors warned that without safeguards, virtual hospital programs could unintentionally replace outpatient care with unnecessarily intensive services.

They also stressed the need for careful program design to avoid this misuse.

For hospital-at-home models such as Safer@Home to succeed nationally, authors urge that reimbursement reform is essential.