Community care for the elderly: Costs and dependency

0277-9536/U$3.00+0.00 Copyright 0 1985Pergamon Press Ltd

Sot.Sci.Med. Vol.20,No. 12,~~.1313-1318, 1985 Printed in Great Britain. All rights reserved

CARE FOR THE ELDERLY: COMMUNITY COSTS AND DEPENDENCY MARTIN C. SNFLL University

of Bath, School of Humanities

and Social Sciences, Claverton Down, Bath BA2 7AY, England

Abstract-The aim of the paper is to examine the costs of care of elderly persons who live in their own homes as compared to those in residential homes. This is seen as a necessary first step in any planning process. From a survey of elderly persons in Britain, the levels of domiciliary services provided to those in their own homes was ascertained, and unit costs of each service was applied. Costs were based on the economic concept of social opportunity costs, so that all costs were included, and not just those accruing to the local authority. Recognising the fact that the costs of care in the community were likely to vary with the level of health of the elderly person, an attempt was made to categorise elderly persons into various levels of dependency. Secondly, regression techniques were used to ascertain whether the level of dependency did significantly affect the costs of care. It was found that variations in the average costs of care were significantly explained by both physical and mental characteristics of the elderly person. In addition, sex was important, as well as the elderly person’s area of residence. This has important implications by itself for planning care services. It was also found that very few persons who were sampled in the community had a total cost of care greater than the average cost found in residential homes.

Given all the studies and surveys carried out into the care of the elderly, it is surprising that there is no concensus as yet on the comparative costs of care in the community, as against those in residential homes (see, for example, Wager [ 11,Plank [2], Ferguson and Bagnall[3]). Close examination of all these will reveal that much of the variation in costs is due to the markedly different ways in which costs are measured or estimated. It is also important to recognise that the concept of the cost of community care is misleading, since the method of measuring costs will depend on the purpose of the exercise. The studies above have, in varying degrees, lacked an appreciation of both this, and of the need for great care in comparison of costs between two or more modes of care, to ensure that there is a common base line in each mode. For example, it is not enough to compare ‘average’ costs in all modes, with no regard for the type of elderly persons upon whom the costs are based. It is to be hoped that this paper avoids the majority of these pitfalls. The results below are based primarily on a survey of over 1500 elderly people, undertaken in 1977/ 1978 in three local authorities in different areas of Britain. The survey covered persons in three modescommunity, residential care and long-term hospital care. The majority of the resulting nine sub-samples were not chosen randomly, and in particular the community sample was aimed at selecting the more dependent elderly persons. This should be of little importance, given the aims of the paper. The purpose of the paper is to compare the costs of care in the community with those in residential homes for varying degrees of dependency in the elderly person. Although the actual level of costs has increased since the survey, it is likely that comparative costs are much the same. The basis for cost estimation is thus one of transferring resources from

one type of care to another. This is not to say that planning for care of the elderly should be purely on cost grounds, since other factors are also important for this. For example, the benefit to the elderly person in each mode of care (in terms of the effect of the mode of care on a person’s health and general well-being) is also relevant, and ideally this should be measured in some way and incorporated into a fuller analysis. However, without this information, we can still examine the difference in costs between the two modes and ask ourselves whether the cost differential is worth what we believe the difference in benefits to be. Further investigation on actually quantifying these benefits still needs to be carred out, as is stressed in most recent contributions (see for example Judge et al. [4]).

PRINCIPLES OF THE COST ESTIMATION

If, a priori, we are considering the possibility of a shift away from residential homes towards the community, it is clear that the costs we should consider in the community are those of an expansion of the services. The reverse proposition could also be studied. AN such costs should be included, if there is to be this comparison made with other modes of care. The total costs of care can conveniently be divided into four largely distinct components: (1) The costs of major items of capital expenditure (mainly accommodation). (2) The costs of everyday living (food, etc.). (3) The costs of care provided informally (from friends, relatives, etc). (4) The costs of care services provided formally (home-help, personal care provided in residential homes, etc.). 1313

1314

MARTIN C. SNELL

To estimate each of these is not such a straightforward matter as it may sometimes appear, and problems encountered include for example the questions of estimating the average transport costs for a visit to a day centre, of estimating the average travel time for nurses making a home visit and of estimating unit costs for wardened housing. More importantly, there is no accepted method of estimating the costs of relatives’ time, etc., which may be considerable in some cases. Indeed, use of our current sample to predict the level of voluntary/informal care if there were a general shift towards community care may be unreliable, so that one could not forecast accurately the costs of a shift in that direction. A more complicating possibility is that persons who are in the community are the ones who have relatives willing and able to support them, and that any increase in the proportion of elderly residing in the community would have to be of those persons without such informal support, so that predictions from our sample would considerably understate the costs of community services required. Because of the significant difficulties apparent, and without a comprehensive set of data on informal help, we have made no attempt to include the costs of relatives’ time, etc. This must therefore be kept in mind, along with the point about benefits, when comparing the costs of the different modes of care. A detailed review of problems in costing, and in how the various studies have coped with them, has been made elsewhere [5] and we shall concentrate here on applying the various figures obtained. The costs of the major care services themselves were arrived at as accurately as possible from accounts and data in each of the local authorities, although for comparative purposes, those used below refer to only one. Full details are in Wright er al. [6].

COST

It is convenient sections:

SUMMARY

to split the costs of care into two

(a) costs which are unlikely to be determined by the health status of the elderly person, and (b) costs which are likely to depend on the elderly person’s level of health. It is clear that the costs of domiciliary services are especially likely to fall into category (b), whereas we can be fairly certain (although this must remain an empirical issue) that the costs of food and shelter etc. are in category (a). As an empirical issue it is not always possible or even desirable to maintain the distinction between the two types of cost. Thus in residential care, it would be a complicated matter to apportion staff care costs when there is a considerable amount of general supervision. Indeed we have thought this approach undesirable, since in fact any planning decisions are likely to affect the total number of homes rather than to make marginal changes in the number of persons in each home. For institutional care, we have therefore considered only the average of all costs per week per person. Given that the majority of residential homes for the elderly contain a mix of residents of

Table

1. Summary

of costs Community

(a) Total costs Residential Home

Hospital

Alone

With others f27.03 f28.03

El 1.89 f24.39

(b) Differences between community care (excluding and 4 above) and residential care (full costs)

components

ES6

Ordinary: Wardened:

f9M

107

Ordinary: Wardened:

Alone

With others

f29 f28

f44 f31.5

3

varying degrees of dependency, this is a logical approach to adopt, assuming that there is no change in such a policy. However, we must be aware that any changes in policy to alter this mix, whether as a consequence of cost/benefit studies, or for reasons entirely unrelated, are likely to have some effect either on costs (due to changes in staffing levels) or on benefits. A cost summary is shown in Table 1, which shows total average costs for institutional care, but only costs of type (a) for community care (i.e. excluding the costs of domiciliary care services). All cost figures in this paper refer to the financial year 1976/1977. The full details behind the summary of Table 1 are fairly complex and will not be set out here. Persons living with others have been treated as separate category because, for example, where they are living with relatives, there is little or no resource cost in terms of housing, since no housing may be freed as a result of entry into a residential home. Part (a) of the table shows the wide distribution of costs in the various modes of care, and part (b) concentrates on the differences in costs. Since, as noted, the costs in Table 1 for the community do not include the costs of care services, either formal or informal, we have included part (b) which shows the amount which could be spent on care services in the community before residential care became the cheaper option. Whether and how often this difference is used up in practice will be examined in more detail below. The costs of care likely to depend on the elderly person’s state of health included the costs of all major domiciliary services-home helps, mobile meals, day hospital visits, home nursing, etc. The costs were obtained in some detail so that, for example, the cost of home-help was charged at El.31 per hour of direct contact, 8.1~ per visit for travelling and 27p per case for administration. This kind of breakdown is necessary when one is considering changes in the level of provision, and is to be preferred to one overall average of so much per case for home-help, etc. MEASURING

HEALTH

More specifically, we are interested in isolating those factors likely to influence the costs of care. Whilst ‘health’ would seem a possible candidate in general terms, we need to be much more specific than this for empirical work. The approach adopted here is to use two measures, based on a person’s physical and mental abilities. The technique for the former involved fitting a ‘scale’ to a set of items, for which

1315

Care costs for the elderly Table 2. Distribution

of abilities All community sample y0 disabled on item

Grade

Item

1 2 3 4 5 6 7 8 9 IO

Does not do all shopping on own Unable to do heavier housework Does not go outdoors into street without help Unable to get outdoors without help Unable to bath without help Unable to dress without help Unable to get out of bed without help Unable to sit down or stand up without help Unable to move around room without help Unable to feed without help

95 83 12 60 51 17 11 7 4

I

we knew whether an elderly person could perform or not. In brief, this Guttman scale involves a hypothesis that there is a definite ordering of certain items of abilities, and that as persons get older their abilities are lost in a clear cumulative manner. Thus from a set of seven items referring to abilities to bath oneself, feed oneself, etc., any elderly person would be. found to be in one of only 8 possible states. From the knowledge of a person’s inability to perform a certain item, we can predict the other items he/she is unable to do. At one end of the scale would be a person able to do all seven activities, and at the other would be a person completely dependent in them all. Its main advantage over other systems is that the number of possible states is reduced and that unlike a ‘points’ system there is little value judgement made by the researcher [7]. Compared to a points system, it is possible that persons within one dependency state are more similar than in the situation where a large number of different combinations of disabilities may give rise to the same number of points. This is not to say that Guttman scaling is the ideal solution, since it too has its disadvantages. Clearly though, it might have some potential when attempts are made to measure changes in health status. This Guttman scaling approach was originally used in the assessment of the elderly by Katz [g-lo] and has been used successfully by others since then [11-141. From the large number of ability questions asked to all members of the sample, a systematic search was undertaken to find a suitable set which would scale ‘well’. The scale chosen as most satisfactory was

based on 10 questions, as shown in Table 2. Nearly 75% of those in the community sample fitted into the 11 categories arising from the resulting scale. The measurement of mental state was much more ad hoc, since the survey was not primarily designed to investigate this question, to which many people have devoted considerable research efforts across many disciplines. However, it was felt that it might play a significant role in determining the costs of care, so was too important to ignore completely. The questions available were really designed for screening elderly persons to see if they would answer further questions reliably or whether a proxy interview was to be taken, and covered such topics as giving the correct year or day of the week. Because of the large number of mentally alert persons in the community, it was difficult to find any scale which had any degree of sensitivity, but one possibility that emerged was the two item scale covering the elderly person’s ability to give the correct year and month. Of the 712 persons who answered both questions, 86% answered both correctly, 8% gave one wrong answer and the remaining 6% gave two wrong answers. In the community sample, over 97% of persons fitted the ‘expected’ ordering of answers to these questions, although a high percentage would be expected given the large number of persons correctly answering both. Table 3 gives the spread of abilities when both physical and mental scales were combined. This distribution of dependency was obtained by totting up the number of items disabled, irrespective of whether they fitted the Guttman scale. In addition, the physical scale has been slightly amended for this table in order to contrast with institutional care, for whom no questions were asked regarding shopping and housework. It can be. seen that even in residential homes, there are a high percentage of persons with low physical dependency, but compared with the community sample, these persons more frequently also have a poor mental condition. It may therefore be misleading in these sorts of exercises to concentrate on physical aspects alone, although of course a mental score of 2 may not be particularly severe, or may be of minor importance if day-to-day tasks can still be carried out. The hospital sample is, as might be expected, more heavily concentrated with persons of poor physical and/or mental condition (results not

Table 3. Physical and mental dependency distribution Community sample Physical 0

I 2 3 4 5 6 7 8 Total

0 9.5 15.9 13.7 36.5 5.4 2.1 2.2 1.2 0.1 86.7 No. in

Mental 1 2 1.3 1.5 1.3 2.5 0.6 0.1 0.1 0.4 0.1 8.2 sample:

0.1 1.0 0.4 0.7 0.6 1.0 0.3 0.4 0.3 5.1 671

Residential home

Total

0

11.0 18.5 15.5 39.8 6.6 3.3 2.7 2.1 0.6 100.0

10.5 13.6 10.7 9.6 4.0 1.9 0.8 1.0 0.0 52.2

1

Mental 2

Total

1.9 0.4 12.8 3.6 3.1 20.3 4.4 3.8 18.9 5.9 6.5 22.0 0.8 3.4 8.2 0.6 3.6 6.1 0.6 2.5 4.0 1.3 4.2 6.5 0.0 1.3 1.3 19.1 28.7 100.0 No. in sample: 477

Notes: (1) Score equals number of failed items; (2) figures are percentages of total relevant population. S.S.M. *0,1*--H

1316

MARTINC.

presented here). It is noteworthy, however, that there were still a substantial number of persons in apparently very similar states in both’ community and residential care. If our physical and mental scales have captured all the characteristics which one feels should determine the appropriate mode of care for elderly persons, then even without any cost exercise it would clearly be possible to conclude that there was some mis-allocation of resources in the system. For under the ‘ideal’ allocation, it would be expected,that by and large all persons of a similar conditionland circumstance would be cared for in a similar mbde, irrespective of place of residence, etc. CHOICE

OF COST

SNELL

something directly measurable, like height, but a rather more intangible substandependency. Clearly we are looking for a best-fit relationship and initial experimentation revealed that a cubic relationship between costs and physical disability seemed a satisfactory approximation. Other possibilities estimated and which proved inferior were quadratic, logarithmic, exponential and a general power term. Besides controlling for the three locations of the survey, we continued to control for sex, although to keep the problem to manageable proportions, we assume, recognising that this may not be correct, that any sex differences would be similar for the three areas.

FUNCTION

The nature of the relationship, if any, between costs and dependency is likely to be complex and involving other factors which we have been unable to measure, and u priori there is likely to be a considerable variation in services provided, even to persons of similar health states. Factors such as the political administration of the local authority and the level of the rate support grant, are likely to be important. For this reason, we control for the differences between the three local authorities involved in the survey, although as noted above, the cost figures used were obtained from only one. Clearly then, we should not expect to explain a large proportion of the variation in the costs of care. The focus in the rest of the paper is on explaining the costs of care in the community of those who live alone. Attempts to explain care costs for those living with others were unsatisfactory, presumably because there may be a wide variation in the amount of informal support received, replacing the formal services in varying degrees compared to those living alone. A preliminary investigation examined, using a simple analysis of variance model, whether there were variations in the costs of care which could be attributed to physical or mental disabilities. Other variables included were sex (in case services were provided to different levels for males and females even if they were of similar physical and mental disability) and the local authority area of the survey (one of three). Because of the large number of empty ‘cells’, it was not possible to include any interaction terms in the estimation, so the results may have been slightly biased, but they did suggest that both physical and mental disability, and sex, were significant in explaining variations in costs. Costs of care here, as throughout the remainder of the paper, consisted only of component number 4 above, since it was thought that only these care services costs were likely to be explained by levels of dependency. The introduction of other costs, such as food costs, would only be likely to bring in spurious variations. A simple ANOVA is however not what is required, since we are more interested in determining the exact nature of the relationship between costs and dependency, rather than knowing that one exists. We therefore turned to a regression approach with costs as the dependent variable, and dependency measured by the number of disabilities, a variable ranging from 0 to 10. To decide on the exact form of relationship to estimate is no easy task, since we are not recording

ESTIMATION

OF THE COST FUNCTION

The incorporation of mental state makes the situation even more complex. Because of the small number of persons in the community sample with a noticeable mental problem, as revealed by our two chosen questions, it was necessary to collapse the two variables into one, so that we then had a variable which took the value 1 for some mental problem and 0 for no mental problem. Even with this simplification, it was thought appropriate to realise that the costs of care might vary with the interaction between mental and physical state, rather than just treating them separately. In simple terms, the sum of costs for a person with only a mental problem and for a person with no mental problems of a particular level of physical dependency, might be less than for a person with both the mental and the physical disability. The full equation, allowing for most interactions, contained 32 variables. Unfortunately, some variables were forcibly omitted during estimation by the computer package used, presumably because of high collinearities. Full results are presented in Snell [5]. Excluding persons who did not fit into the scaling category devised earlier, it was possible to explain 36% of the variation in costs. It is pertinent to ask why this figure is so low, and we can distinguish three factors. Firstly, we have not included any figures for relatives’ time, etc. spent assisting the elderly person and this may act as a substitute for formal care. Secondly, we may not have taken into account all the factors which social and health services take into account when assessing the level of services to provide. Indeed there are always the small individualistic factors which cannot be considered in large-scale exercises. Finally, there is always the human element to deal with and it is likely that a large proportion of the variation in services provided may simply be due to the differences of opinion between those persons who are in charge of deciding on the level of services to allocate. To establish the rigorousness of the results, some experimentation on removing insignificant variables was undertaken, and it became clear that a core of about 10 variables provided the significant explanation of total costs. Any costs added were generally insignificant. Results are presented in Table 4. In Table 4, equation (1) shows the results when all persons who do not satisfy the Guttman scale outlined above are excluded from the analysis. In order to provide a larger sample size, the analysis was

1317

Care costs for the elderly Table 4. Regression

estimates Excluding non-scales

Variable CNST DEP MENT MENT SEX x DEP2 SEX x MENT MENT SEX x DEP’ SEX x ii2 F No. of

Including non-scales 6.48 2.71 (1.78) 8.35 (4.32)

8.67 x DEP DUMMY x DEP DUMMY (area 3) MENT x DEP DUMMY DEF DUMMY x DEP’ DUMMY x DEP’ DUMMY (area 3) MENT x DEP’ DUMMY DEP3

cases

10.57(4.14) -4.77 (2.45) - 7.34 (2.65) -0.85 (3.61) 0.94 (4.01) -2.33 (5.24) 1.20(3.19) 1.59(3.15) 0.24 (6.27) -0.22 (5.41) 0.36 20.43 351

-8&4.01) - I.50 (3.23) 0.86 (4.20) - l.gl(5.16) 0.20 (2.12) 1.96 (4.83) 0.28 (5.80) -0.21 (5.68) 0.28 20.10 489

I -ratios in brackets. Those living alone only

repeated when this restriction was relaxed, the results of which are given as equation (2). As might be expected, since the extra persons in each dependency category have been obtained by reducing the degree of homogeneity within each group, the degree of explanation as measured by R2 was now lower. In terms of the significance of coefficients, the only difference between the two equations was the interchangability of the DEP coefficient and the MENT x DEP DUMMY (area 3). If included in equation (2) the latter coefficient has a t-ratio of 0.97. If included in equation (l), the DEP coefficient has a t-ratio of 1.60. Whilst we cannot yet see the effects of the sizes of the coefficients, the important results are that there are significant differences in service provision according to physical disability, mental disability, sex and location. This is likely to have considerable implications for service planning. A particularly interesting way of looking at the results is to plot the cost curve for each of the significantly different cost groups. This is done in Fig. 1 for equation (2) of Table 4. In this figure, four

curves are drawn corresponding to each sex and to whether the mental state variable equalled one or zero. Two further curves show the area 3 variation when this mental state variable equalled one. Because of the low numbers of persons living alone with over six disabilities, these curves will have large standard errors at high levels of disability. With this in mind, we can see that up to about 5 disabilities, elderly persons who have a mental problem, whether male or female, would tend to have at least as high a cost as similar persons without the mental problem. This is as we would expect. Secondly, costs in area 3 are higher for those with mental problems than comparable persons in the other two areas. There could be many reasons why one local authority chooses to spend more than others and a more detailed investigation, beyond the scope of this paper, might obtain some interesting results. In Fig. 1, one obvious cause for concern is the curve for males in areas 1 and 2 with a mental problem. Between certain levels of dependency this shows a general declinein costs as physical disability increases, due primarily to the large negative MENT x DEP’ coefficient. This does not coincide with our expectations. It is likely that this is due to the low number of persons in this category-in which in fact there were only seven males covering all levels of physical dependency. If we examine the observed mean costs then it can be seen that in this case there were a few persons of low levels of dependency with high costs, and since our curve is designed as a best fit to a set of points, it will reflect this, although it is likely that the result will not be applicable to another population. If we recall from Table 1 that services could be provided up to a total cost of E28 per week before they reached the cost levels of residential care, then the results as revealed in Fig. 1 are perhaps surprising, for this point is scarcely reached by any of the curves. In other words, using a survey of actual services received in the community, we found that even at very high levels of physical and mental

Mental

0 (Ml

/

/

/

/ / .I

./ ./-

Mental I, Area 3 (Fl

/,’

.I .I

/

/

_.'

.H'

B 6

0

I

I

1

2I

31

INo.

I

I

I

4

5

6

of disabilities

Fig. 1. Costs and dependency.

Mental 1, Area 3 tM)

/’

..’

/’

,,Mentall,AreaslR

I 7

Z(F)

MARTIN C. SNELL

1318

disability, the costs of care in the community for those living alone were still lower than residential care costs. This result is also borne out if we examine the distribution of care costs for each member of the sample, for out of a total of 561 persons living alone, only 21 had domiciliary service costs of over E28 per week. CONCLUSIONS

It is therefore evident that the disability level at which care costs in the community approach those in residential homes is very high. A lower level of residential care costs, or a change in our measurement of community care costs, perhaps to include informal help, may of course change these results to some degree, so that the curves identified in Figure 1 were more useful in identifying these. ‘break-even’ points. The cost figures obtained for high levels of physical and mental disability must be regarded with some caution because of the low numbers at this end of the scale, this despite our aim of sampling only the more dependent members of the elderly population in the community. However, the finding of so very few dependent elderly persons in the community is confirmed in similar surveys. Thus Hunt [15], from a random sample of elderly persons, found that where the person lived alone, only 3.9% were housebound. Where the elderly person lived with relatives (but not just a spouse or sibling), this percentage was about doubled. It is clear, as might be expected, that elderly persons of high dependency are rarely left to live on their own, with help from statutory services or relatives, but have either moved in with relatives, or into residential accommodation. There are likely to be many reasons why this occurs in current social services practice, but all surveys of elderly persons living in the community are likely to face the same problems. To obtain more dependent elderly persons in the sample, a different approach may be needed which examines persons admitted or likely to be admitted to residential homes, and examines whether they could live in the community with increased levels of support, possibly with new types of services. This could either be on a theoretical basis [16] or using an experimental scheme [ 171. Overall, we must not lose sight of the other side of the coin-that of the effects of the different types and levels of service on the elderly person’s well-being. This is another area that warrants considerable investigation. What we need to ask ourselves following the results above is the important question of whether the presumed extra benefits from being in residential care are worth the differences of up to f20 per week or so (1977 prices, and depending on the level of dependency) which are being spent on maintaining persons in a residential home, compared to a possible alternative in the community.

Acknowledgement-Thanks are due to DHSS who funded the research project in which the data were collected.

REFERENCES

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