Policy efforts to control costs mean that an appropriate balance between formal and informal caregiving systems must be created, but few studies have examined the costs associated with caring for chronically-ill older adults in their homes. The purpose of this study was to describe changes in perceived health status for patients and caregivers and to evaluate the effects of those changes on the utilization and cost of both formal and informal services in the home.

A comparative prospective panel design was used to interview a sample of 21 chronically-ill patients and their 21 primary caregivers on admission to a Medicare-certified home health care agency, at termination of skilled services, and 30 days after discharge. Health status measures included the Sickness Impact Profile, Activities of Daily Living, Instrumental Activities of Daily Living, and Burden of Care. Formal services and costs were evaluated using visits made and charges billed to Medicare and/or Medicaid. Informal services and costs were evaluated using hours of assistance provided with ADLs and IADLs and regional hourly wage rates. The data were analyzed using within-subjects repeated measures analysis of variance procedures.

Health status of patients changed significantly across time, with patients who got better showing improved health status but continued difficulty with ADLs and IADLs. Burden of Care did not change statistically over time. Formal service costs were higher for patients who got worse compared to those who got better. Patients received 4.4 mean hours of informal services per day. Intensity of informal services was greater during initial home care services; however, intensity remained the same and did not change for those who got worse. The average cost per patient day was $47 for formal services and $44 for informal services.

This study revealed a highly impaired patient group with dedicated informal caregivers spending an average of 31 hours each week helping with ADLs and IADLs in addition to the visits made by formal service providers. The findings from this study have importance for public policy and clinical practice with regard to forging realistic linkages between both the formal and informal support systems as patients move from one provider system to the next.