Background: Dementia is the most common cause of functional decline among elderly people and is associated with high costs of national healthcare in European countries. With increasing functional and cognitive decline, it is likely that many people suffering from dementia will receive institutional care in their lifetime. To delay entry to institutional care, many European countries invest in home and community based care services.

Objectives: This study aimed to compare costs for people with dementia (PwD) at risk for institutionalization receiving professional home care (HC) with cost for PwD recently admitted to institutional long-term nursing care (ILTC) in eight European countries. Special emphasis was placed on differences in cost patterns across settings and countries, on the main predictors of costs and on a comprehensive assessment of costs from a societal perspective.

Methods: Interviews using structured questionnaires were conducted with 2,014 people with dementia and their primary informal caregivers living at home or in an ILTC facility. Costs of care were assessed with the resource utilization in dementia instrument. Dementia severity was measured with the standardized mini mental state examination. ADL dependence was assessed using the Katz index, neuropsychiatric symptoms using the neuropsychiatric inventory (NPI) and comorbidities using the Charlson. Descriptive analysis and multivariate regression models were used to estimate mean costs in both settings. A log link generalized linear model assuming gamma distributed costs was applied to identify the most important cost drivers of dementia care.

Results: In all countries costs for PwD in the HC setting were significantly lower in comparison to ILTC costs. On average ILTC costs amounted to 4,491 Euro per month and were 1.8 fold higher than HC costs (2,491 Euro). The relation of costs between settings ranged from 2.4 (Sweden) to 1.4 (UK). Costs in the ILTC setting were dominated by nursing home costs (on average 94 %). In the HC setting, informal care giving was the most important cost contributor (on average 52 %). In all countries costs in the HC setting increased strongly with disease severity. The most important predictor of cost was ADL independence in all countries, except Spain and France where NPI severity was the most important cost driver. A standard deviation increase in ADL independence translated on average into a cost decrease of about 22 %.

Conclusion: Transition into ILTC seems to increase total costs of dementia care from a societal perspective. The prevention of long-term care placement might be cost reducing for European health systems. However, this conclusion depends on the country, on the valuation method for informal caregiving and on the degree of impairment.