It's easy to be cynical about the state of health care today, but there is a refreshing solution to the problem of caring for our growing elderly population, if you know where to look: in their homes. Here is one story I love to tell. In the late 1990s, I became medical director of a managed care physician group in Los Angeles and met a doctor named Henri Becker. His role was to oversee the care of our hospitalized patients, most of whom were elderly. Becker had come to a radical realization: No matter how well we cared for sick elderly patients in the hospital, they continued to consume a disproportionate amount of our resources and to make repeated visits to the emergency room. The problem was not how we managed the hospital; it was our failure to manage the patients' home environments.

So he decided to shift his focus from moving patients out of the hospital quickly, the sine qua non of a managed-care organization, to managing the reasons they were arriving at ERs in the first place. Even the so-called "ambulatory" chronically ill elderly were not getting to their doctors' offices for proper treatment of serious and sometimes unstable medical conditions, such as congestive heart failure. When a crisis came, often in the middle of the night or on weekends, those patients would dial 911. Once the ambulance arrived, the outcome was predictable: hours in the ER, several days in a hospital bed and thousands of dollars of needless expense.

That's why Becker had moved his own practice out of the hospital and started visiting the homes of elderly patients, beginning with those who had been admitted to the hospital or visited the ER more than twice in the past year. His car became his office; his practice became based on a model that hadn't been popular since the 1950s.

But the medical group did not appreciate the importance of house calls, and was threatening to terminate Becker's home visiting program. I was intrigued by Becker's theory, so I agreed to investigate by accompanying him on some of his neighborhood rounds.

One of his patients was a 70-year-old man, partially paralyzed from a stroke two years earlier. His daughter had called Becker, worried because her father had developed a fever. At the man's home, we were greeted by family members offering pastry and coffee. Becker examined his patient, diagnosed mild pneumonia and started him on an antibiotic. The visit took 15 minutes and cost our medical group $100. The next day, the man's daughter called to report that her father's temperature had dropped and he was regaining his appetite. This patient had endured six hospital admissions during the year before Becker started seeing him and none afterward. His stroke had left him prone to complications, but with home visits, Becker was able to catch illnesses in their infancy, before they became critical.

The question remained: Did home visits make financial sense for us? We were a medical group operating on a fixed budget. Becker's approach undeniably had nostalgic appeal, but I had no chance of helping his cause if the numbers didn't add up. I asked the group's finance department for help.

When we analyzed Becker's home visits, we were amazed at the savings. Using one of managed care's key units of measure, dollars "per member per month" (PMPM), we found that for the 40 chronically ill patients studied, Becker's house calls had saved a staggering $2,234 PMPM on average. In a year, Becker had saved the group more than $1 million by preventing unnecessary hospital admissions and ER visits, better managing expensive prescription drugs and improving coordination of care. When we compared an additional group of patients who had died at home with a group of patients who had died in a hospital, the cost saving was an even more impressive $2,500 PMPM. Specialist consulting fees that had been generated during hospitalizations were nearly eliminated in the case of Becker's patients. Several small studies from around the country have shown similar economic and health benefits flowing from home visits for elderly people with serious diseases.

With the enriched patient-doctor relationship that house calls foster, Becker was able to distinguish complaints that might lead to a more serious problem from the annoying but ordinary symptoms of aging. He could quickly assess a home for hazards that might lead to falls. He could decide whether a spouse is competent to care for a patient. And he could figure out whether the patient can remain in the home or should move to a less independent setting.

Given the potential savings involved, you'd think Becker's approach would have caught on all over the country. But that has not happened -- even in Becker's own medical group. In fact, shortly after I left the group, I was told that the CEO was questioning Becker about why he had visited some elderly patients several days in a row. The CEO was also troubled that, because Becker billed for fee-for-service house calls, he had a higher annual income than office-based internists in the group, who were paid a fixed amount for the patients they managed. The CEO's attitude was typical of managed care's low-ball "one-size-fits-all" payment approach to all services, regardless of their relative cost and quality benefits. Becker's contribution to the medical group's bottom line with every patient he cared for far outweighed the premium they paid him, and the improvement in the patients' medical conditions was unquestioned. Without that financial incentive, there would have been no Dr. Becker, just more sick patients in the ER. Despite the solid evidence in favor of expanding the home visit program, the CEO could not shake off his preconceived notions and provided only lukewarm support. Frustrated, Becker left the group so he could continue his approach.

Even in non-managed care environments, the news is not hopeful. Medicare, for one, has not made the most of the possibilities of home visits. Constance Row, executive director of the American Academy of Home Care Physicians, a small but committed advocacy group, notes that in the four years since the federal government's Centers for Medicare & Medicaid Services increased house-call fee reimbursements for certain bed-bound patients, there has been no upward trend in home visits. Faced with high office overhead, few physicians dare leave the financial safety and familiarity of seeing 20 patients in their office each day. Clearly, incentives to promote home visits are inadequate.

As for physicians who remain committed to house calls, Medicare has given some of them painful mixed messages. Gresham Bayne champions home visits in San Diego, where thousands of elderly retirees live. His group has been providing visits to homebound patients with a median age of 82 for more than a decade. Yet NHIC, one of several insurance companies that administer the Medicare program in California, continues to subject group members to continuous reviews and re-reviews of their claims for payment. In a recent prepayment investigation, NHIC withheld $150,000 owed to Bayne's group, forcing them to announce layoffs of 10 employees, before suddenly reversing the decision under pressure from families. Although Medicare carriers surely have a responsibility to detect billing fraud where it exists, NHIC's intrusive audits of Bayne's practice seem unreasonable: More than 90 percent of their denials are fully reversed during the appeals process.

Total Medicare spending reached $238 billion in fiscal 2001 and is expected to rise to $309 billion by 2006. Of the 40 million people eligible for Medicare today, a conservative 5 percent, or 2 million people, could benefit from physician home visits. Based on the savings our medical group was able to achieve, it is reasonable to assume that approximately $50 billion could be saved every year by practitioners such as Becker and Bayne. Cost benefits for home visits are likely to be even bigger when they involve low-income elderly patients who are also minorities. Due to a complex interaction of cultural, environmental, socioeconomic and genetic factors, ethnic minority populations have disproportionately high rates of end-stage renal disease and other complications of diabetes. Not coincidentally, the elderly poor are far more likely to end up prematurely in substandard nursing facilities.

Since leaving the medical group and forming his own home visit business, Becker has replicated his results in several settings. His doctors use direct-connect cell phones and portable computers linked to the company office, allowing them to order lab tests and equipment from the patients' homes. Contrary to conventional medical wisdom, though, lab tests are seldom needed -- just the good, old-fashioned doctoring skills of listening, observation and examination.

"Doesn't Dr. Becker get a million phone calls every day from his elderly patients?" is a question I am often asked by skeptics. On the contrary, because Becker's patients have direct access to him via his cell phone and don't have to explain themselves to an answering service or wait on hold, they rarely call him. When they do, he quickly solves most problems over the phone.

Decades ago, house calls fell by the wayside when doctors needed proximity to office- and hospital-based tests and procedures. Today, technology has made home visits cost-effective, and the growing number of ailing elderly creates a ready market. It's the providers who are lagging.

Adequately funded national initiatives to promote home visits could be an antidote to the problem. Educating unwilling managed care and Medicare administrators could be another. So could investing in future physicians; however, among internal medicine training programs responding to a 2001 University of Pennsylvania survey, fewer than half said they offered any lecture about home care in their curricula, and only 25 percent demanded mandatory house call experience.

Dedication to the concept of physician house calls could halt the cycle of sick elderly patients bouncing from ER to hospital to nursing home and back again, unnecessarily consuming billions in health care resources. Home-visit physicians, using the tools of medicine and communication, should be equal partners with their colleagues in hospitals and traditional offices in providing care and support to our burgeoning elderly population and the adult children struggling to assist them.

Joseph Spooner, a neurologist, is chief medical officer of UHP Healthcare, an HMO in Los Angeles.