This article was originally posted on Harvard Business Review. Read the full article here.

The U.S. health care system is not set up to improve the quality of life of the most vulnerable, chronically ill, elderly people, especially those who are poor. Older poor people often face loneliness, depression, a lost sense of purpose, and an inability to live independently in their homes. They also encounter many health service hurdles, including inadequate care coordination, fee-for-service reimbursement that often reflexively encourages medical treatment over other forms of care, and a dysfunctional nursing home industry.

To help improve services for these patients, we analyzed the design and implementation of a national program called PACE: Program of All-Inclusive Care for the Elderly. We focused on this program because all PACE participants are vulnerable: They require nursing home–level care, and 90% are eligible for both Medicare and Medicaid. Few integrated-care programs serve this dual-eligible population, which now numbers 12.5 million Americans.

In-depth interviews with PACE staff and program participants conducted by two of us (Len Berry and Sunjay Letchuman); collaborations with PACE leaders, including two coauthors of this article (Mary Kummer Naber and Peter Fitzgerald); and our collective analysis of the features and daily operations of a PACE model in southeastern Michigan (led by Mary) reveal how PACE successfully delivers individualized, home-centered care to poor older adults while lowering overall costs. Given that PACE currently serves only about 60,000 of these patients, expanding the program has useful management and cost implications for health care systems nationally. Although nursing home and other institutionalized elder care clearly demand improvement, the United States also must invest in reimagining what elder care can be. PACE provides a roadmap.

More Comprehensive, Less Costly Care

The PACE program, first developed in San Francisco in 1973, is a comprehensive, integrated, community-based care model that lets older adults continue to live at home as long as possible. There are now 150 PACE programs in 32 states. The basic philosophy is that care should include what matters most to older poor people: all-inclusive care comprising nutrition, social interaction, transportation, and home upkeep, in addition to medical and related services. The goal is to treat patients with dignity as they safely live at home, rather than in an institution, and receive every needed service from one entity — all while lowering costs.

All Medicare beneficiaries needing nursing home–level care but wishing to live at home are eligible for PACE. However, Medicare beneficiaries who do not meet their state’s Medicaid income requirement are required to pay an amount equivalent to the monthly Medicaid payment, limiting access to millions of seniors who could benefit from the program.

The program offers patients (called “participants”) all their Medicare- and Medicaid-covered benefits, including primary care, adult day care, rehabilitative care, and meals at a local PACE center. PACE provides transportation and various in-home services and is the payer for medical care that it cannot offer internally, such as emergency room visits and hospital stays. PACE organizations are paid on a monthly, risk-adjusted, capitated basis by Medicare and Medicaid, meaning they are paid a set amount per month based, in part, on participants’ medical complexity. PACE programs bear full financial risk for all care, and participants do not pay anything out of pocket.

Available evidence shows that PACE reduces health care utilization and costs. Compared with similar populations, PACE participants have substantially lower rates of hospitalization (539 vs. 962 admissions per 1,000 person-years). South Carolina, for example, annually saves nearly $9,000 per PACE participant compared with residents in alternative long-term care settings such as nursing homes; Wyoming saves over $12,000 per PACE participant. However, PACE is about far more than saving money — it is about restoring dignity and joy to people’s lives.

An Exemplary Model

One outstanding PACE program is PACE Southeast Michigan (PACE SEMI), which the National PACE Association identified as a “bright spot” for its growth and quality metrics. PACE SEMI is organized as a tax-exempt nonprofit and is owned by Henry Ford Health (55%) and Presbyterian Villages of Michigan (45%). With seven centers serving 1,600 participants and employing 700 people, PACE SEMI increases its net enrollment by an average of 30 participants each month, compared with two participants each month in PACE centers nationally. Approximately 15% of PACE SEMI participants visit an emergency room each year for any reason, compared with 25% of PACE participants nationally and 31% of Medicare Advantage enrollees. PACE SEMI participants also use inpatient hospital services less frequently: In 2019, PACE SEMI participants had 302 fewer hospitalizations per 1,000 persons compared to Medicare Advantage enrollees.

The PACE model is built on interdisciplinary teamwork. All PACE SEMI staff members are expected to see themselves as physical, mental, emotional, and spiritual “healers.” They include the primary care doctor who emphasizes preventing illness and injury as much as ordering treatments, the nurse and social worker who coordinate care, the onsite pharmacist who stays alert for prescribed drugs that may do more harm than good for specific patients, the kitchen chef who customizes meals to participants’ tastes and allergies, the participant-care associate who gives supportive care for daily activities (including showers), and the drivers who transport participants to and from PACE centers and other important destinations.

Unlike some PACE programs, PACE SEMI has behavioral health and spiritual care specialists at each center who get to know each participant they serve. In one case mentioned by a PACE physician, a spiritual care provider asked clinic staff to immediately check on a patient who seemed “off.” It turned out the patient was having a stroke and quickly received life-saving care. In a less-dramatic case, a social worker took it upon herself to persuade a local Trader Joe’s store to donate flowers for participants to take home each week. Team members hold weekly meetings where everyone has equal input about how to prevent avoidable emergency room visits and advance the quality of life for their participants.

Whole-Person Care

At its core, the PACE model is relationship-based: Participants and staff members know each other well, which facilitates “whole-person healing” customized to each individual. Indeed, members are called “participants” precisely because of their active role in planning their care, which goes far beyond medical services and addresses head-on the isolation that many older people who live alone endure.

A day at a PACE SEMI center includes needed medical and rehabilitative services and is filled with customized activities such as music, painting, games, breakfast and lunch with friends, and regular group sessions where participants share “what I am grateful for,” cultivating a sense of belonging and community. Participants can get their hair shampooed, cut, and styled. They receive instruction on living safely at home and are given iPads (called “GrandPads”), designed for senior use, that let them easily contact family or PACE staff or play games. The kitchen prepares food for participants to take home at the end of the day. Participants can also use the onsite gym staffed with physical and occupational therapists. (“To see a 90-year-old working out is amazing,” one therapist said.)

“Dancing Kathy” arrived at PACE SEMI in a wheelchair. Aided by the rehabilitation staff, she eventually graduated to a walker and, months later, a cane. In an interview one year after starting at PACE, Kathy said she no longer needed the cane most of the time and could now dance. She then joined several staff members to dance the “Hustle” in front of the cafeteria lunch crowd.

Proactive Investments in Health

Most of the enormous amount spent on health care in the United States is reactive. Patients get sick, treatment ensues, costs are incurred. PACE shows the potential of investing in health, not just health care, proactively. PACE SEMI and other well-run PACE programs do just about anything to help people continue to live at home safely. For instance, if a participant needs a shower chair at home to prevent a fall, PACE SEMI buys the chair, sets it up, and teaches the participant how to use it. With money generated by community fundraising, PACE SEMI fixes porches and stairs, replaces heaters, improves lighting, and even roots out bedbugs. It partners with an ambulance service whose paramedics often provide in-home care that prevents ER visits.

Such spending can greatly improve the quality of people’s lives while reducing downstream costs. One of PACE SEMI’s participants, “Mr. B,” had a career as a musician but now lives alone. After leaving the PACE center each week, Mr. B was a frequent visitor to ERs for mental health–related issues and anxiety. After the PACE staff realized Mr. B was missing music in his life, the center bought him a headset and player so he could listen to his favorite music. The ER visits stopped.

Service with a Soul

PACE SEMI’s secret sauce is its culture. Hiring for caring, not just competence, is as central as intensively training staff to distinguish between nonmedical healing and medical interventions. Some staff members with traditional health care backgrounds must “unlearn” their bias for episodic care. And in working with a vulnerable population, staff must move beyond risk aversion, common in institutional elder care.

Keeping people safe does not require stealing their freedom, as Atul Gawande discussed in Being Mortal: “…our elderly are left with a controlled and supervised institutional existence, a medically designed answer to unfixable problems, a life designed to be safe but empty of anything they care about.” With creativity, compassion, and commitment, a carefully selected, well-trained staff who are themselves treated with dignity can instill dignity, a sense of belonging, and even joy in PACE participants. As Renee, a food service worker at PACE SEMI, puts it, “We add love to the food.”

PACE is about investing in people’s well-being, keeping them as well as possible for as long as possible. It offers older adults the chance to live at home with a higher quality of care — and of life. The current model serves primarily low-income seniors; however, the bigger opportunity is to expand it to include all chronically ill older adults. Such models will be useful as Congress crafts legislation to expand PACE, as health care organizations plan how to launch PACE programs efficiently and effectively, and as program leaders and managers seek to develop the nuts and bolts of care that offers healing to patients and energizes staff.