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Transforming Primary Care Practices into Medical Homes Associated with Significant Costs
As primary care practices are encouraged to transform into patient-centered medical homes (PCMHs) as a way to enhance primary care, very little is known about the associated costs. These transformations create potential financial challenges, particularly among small and independent practices, according to a recent report in the Journal of General Internal Medicine.
In order to measure one-time and yearly costs attributed to medical home transformation, the researchers interviewed practice leaders in order to identify changes that practices made as a result of medical home transformation. The principles of activity-based costing were used to estimate the costs of additional staffing and investments incurred as a result of transformation. The researchers studied 12 primary care practices from the Pennsylvania Chronic Care Initiative (PACCI), a statewide multi-payer medical home pilot program. Of the 12 participating practices, six were family medicine or mixed specialty, five were internal medicine, and one was pediatric only. Additionally, seven practices were system-affiliated, and five were small and independent.
“In medical home transformation, practices can make many changes, including adoption of new structural capabilities such as patient registries, care managers, and information technology,” Grant R. Martsolf, PhD, MPH, RN, policy researcher for the RAND Corporation, and colleagues wrote in the report. “We observed that costs of transformation were significant and highly variable across practices, meaning that a uniform per-clinician or per-patient subsidy may exceed investment costs for some practices and fall short for others.”
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Study results showed that the median one-time transformation-associated costs were $30,991 per practice, $9814 per clinician and $8 per patient. Furthermore, median ongoing yearly costs were $147,573 per practice; $64,768 per clinician; and $30 per patient. Care management activities accounted for a majority of the additional costs, accounting for over 60%.
The researchers also found that overall transformation-associated costs and per-clinician and patient transformation costs were higher for smaller practices and independent practices, when compared with larger and health system-affiliated practices.
“Our findings provide one of the best insights to date about the costs associated with medical home transformation,” Dr Martsolf said in a press release. “These findings should help guide policymakers as they look for ways to encourage more medical practices to make this transition.”
The Agency for Healthcare Research and Quality funded the study. --Julie Gould
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