• Jerrold Hill, Howard Fillit, Simu K Thomas, and Sobin Chang.
• Health Economics Research and Outcomes Evaluation, Jeffersonville, PA 19403, USA. jerroldhill@comcast.net
• Pharmacoeconomics. 2006 Jan 1;24(3):265-80.

IntroductionThe progressive decline in functional status for patients with Alzheimer's disease and other dementias (ADOD) is well documented. However, there is limited information on the economic benefits of interventions improving functional status in an ADOD population. This study estimated the relationship between the degree of functional impairment in patients with ADOD and their healthcare costs and prevalence of institutionalisation.MethodsRetrospective cross-sectional analyses of the Medicare Current Beneficiary Survey (MCBS) were performed. A nationally representative sample of Medicare beneficiaries with ADOD was identified from the 1995-8 waves of the MCBS (n = 3138): 34% in the community, 57% institutionalised and 9% residing in both settings during the year. Three measures of functioning were used: the number of activities of daily living (ADLs) and independent ADLs (IADLs) impaired; an index summarising number and severity of ADL and IADL impairments; and the Katz Index of ADLs. Healthcare costs included costs for all healthcare services received in all settings, regardless of whether they were covered by insurance or paid out of pocket. The relationships between each measure of impairment and healthcare costs and prevalence of institutionalisation were estimated using linear and logistic regression.ResultsHealthcare costs (1995-8 values) for all ADOD patients increased by 1,958 US dollars (p < 0.001) for each additional ADL impairment and 549 US dollars (p = 0.073) for each additional IADL impairment. For community-dwelling ADOD patients, healthcare costs increased by 1,541 US dollars (p < 0.001) for each additional ADL and 714 US dollars (p = 0.022) for each additional IADL. Costs also increased by severity on the summary index and the Katz Index. Odds of institutionalisation also increased by the three measures of functional impairment.ConclusionAlthough relationships between function and costs have been described previously, the exact nature of these relationships has not been investigated solely in patients with dementia. The data from this study suggest a strong relationship between functional impairment and healthcare costs, specifically in patients with dementia. Even IADL impairments, which are common in mild to moderate dementia, may significantly raise costs. The results suggest that therapies and care management that improve functioning may possibly reduce other healthcare costs.

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