Variation in direct healthcare costs to the health system by residents living in long-term care facilities: a Registry of Senior Australians study

Objective This study aimed to examine the national variation in government-subsidised healthcare costs of residents in long-term care facilities (LTCFs) and costs differences by resident and facility characteristics.Methods A retrospective population-based cohort study was conducted using linked national aged and healthcare data of older people (>= 65 years) living in 2112 LTCFs in Australia. Individuals' pharmaceutical, out-of-hospital, hospitalisation and emergency presentations direct costs were aggregated from the linked healthcare data. Average annual healthcare costs per resident were estimated using generalised linear models, adjusting for covariates. Cost estimates were compared by resident dementia status and facility characteristics (location, ownership type and size).Results Of the 75,142 residents examined, 70% (N = 52,142) were women and 53.4% (N = 40,137) were living with dementia. The average annual healthcare cost (all costs in $A) was $9233 (95% CI $9150-$9295) per resident, with hospitalisation accounting for 47.2% of the healthcare costs. Residents without dementia had higher healthcare costs ($11,097, 95% CI $10,995-$11,200) compared to those with dementia ($7561, 95% CI $7502-$7620). Residents living in for-profit LTCFs had higher adjusted average overall annual healthcare costs ($11,324, 95% CI $11,185-$11,463) compared to those living in not-for-profit ($11,017, 95% CI $10,895-$11,139) and government ($9731, 95% CI $9365-$10,099) facilities.Conclusions The healthcare costs incurred by residents of LTCFs varied by presence of dementia and facility ownership. The variation in costs may be associated with residents' care needs, care models and difference in quality of care across LTCFs. As hospitalisation is the biggest driver of the healthcare costs, strategies to reduce preventable hospitalisations may reduce downstream cost burden to the health system. What is known about the topic? Residents living in long-term care facilities have high health and care needs, but little research exists on how downstream healthcare costs vary based on facility and individual characteristics. What does this paper add? Using linked national aged care and healthcare data, this study determined that the average annual healthcare cost per resident was $9233 (95% CI $9150-$9295), with hospitalisation accounting for nearly half of these costs. Furthermore, healthcare costs varied based on facility ownership and size, as well as whether individuals had dementia. What are the implications for practitioners? Understanding sectoral variation and learning from long-term care facilities with lower hospitalisation rates could be a strategic approach to reducing healthcare costs for long-term care residents.