Self-directed services for people with disabilities are a cost-effective option that appeals to both the individuals receiving services and state governments trying to manage a limited budget. With self-directed services the notion that “you can do more with less” has proven to be true. Many studies have shown dramatic cost savings on individual and overall state budgets as well as reported increases in quality of life to the individual’s receiving services. The article “Self-Determination: Individual Costs, System Costs and Quality of Life” by Tom Nerney provides data on changes in individual costs for projects in New Hampshire (the original Robert Wood Johnson Foundation pilot), Michigan and California. These projects reflect a reduction in per person costs compared to others served by traditional services. Two projects in Wayne and Allegan Counties in Michigan also show a reduction in system-wide costs as well as per person when using self-directed services.
Self-direction has also proven to be cost-efficient as these services are more responsive to the individual’s needs and desires. This is different from traditional services, or agency-based services, which often are trying to meet the needs of a larger group of people.
Many states set the upper limit on a person’s self-directed annual budget as a percentage of a traditional or provider agency cost so the costs of self-direction cannot exceed cost of traditional services. The idea is that the overhead costs for self-directed services are lower. In traditional services, agencies are paid recruit, hire, train and provide compensation and benefits to employees. The agency is paying not only for the cost of employees, but the costs of recruiting, hiring and managing them as well.
With self-directed services the individual recruits, hires, trains and determines the compensation and benefits for their caretaker. These costs are based on the individual’s needs, the employees qualifications and the job requirements. The individual supervises their own employee sets schedules and provides on-going training with or without the assistance of a family member or other designated person. The lack of management overhead and other administrative supports lowers the overall cost of the service provided. Self-directed services are also more cost-efficient because people are purchasing only the services they need. Traditional or agency-based services may have a number of service capabilities built into their rate, including ones people may or may not use or find effective. These might include the help of psychologists, dieticians, nurses or other specialists that may or may not be of use to the individual.
Self-directed services also are more flexible and offer more options for how allocated dollars can be spent on. In the self-directed services model, many individuals take advantage of specialized therapies, adaptive equipment, customized training and other education opportunities. The ability to customize the services used by the individual means that a greater portion of the funds available are used by the individual, adding to the cost-efficiency of the model.
“Self-direction is the wave of the future. More and more Medicaid dollars and long term care services are being provided in this way. It is more cost-effective, it is more cost-efficient and people want control over the supports and services they receive in their home,” says Cheryl Vennerstom, COO of Orion ISO and its related company Morning Star Financial Services.
States have ever-growing waiting lists for people in need of long-term care services, especially as our senior population expands in this country. As a result, competition for public resources has also grown, particularly those provided by agencies and other traditional care models. Many states including Utah, Minnesota, Tennessee and others are turning to a self-directed services model for those with disabilities and the elderly. It has proven to be a cost-effective and cost-efficient way to ensure the supports that individuals and families desire.