Researchers find higher costs for medical homes

Healthcare payment reform is needed for the patient-centered medical-home model to be sustainable, according to a report published online by the Journal of the American Medical Association. The model leads to higher operating costs, and most of the savings generated though reduced hospital admissions and emergency-department visits benefit payers rather than providers, researchers concluded.

Researchers from the University of Chicago studied survey results from 669 of the 1,009 community health centers funded by the U.S. Health Resources and Services Administration and compared their adoption of medical-home principles—such as enhanced care access and communication, care management and patient tracking—with 2009 cost figures obtained from HRSA Uniform Data System reports. (Health centers not included in the study either did not participate in the survey or submitted incomplete results.) At the centers surveyed, 5,966 physicians cared for more than 12.5 million patients in 2009.

According to the report, the median operating cost per physician was $1.24 million. The median operating cost per patient per month was $47. The median cost per visit was $130.

The researchers rated the centers' implementation level of medical-home principles on a zero-to-100 scale. Scores ranged from a low of 21 to a high of 90, with an average of 60. Having a score of 70, or 10 points higher than the average, was associated with a $2.26 higher cost per patient per month.

The study noted that some medical-home functions, including improved access and communication, led to lower costs; there was speculation that this was the result of telephone consultations replacing more costly in-person visits. But patient-tracking and quality-improvement medical-home elements were associated with higher costs, which the researchers said could be related to the costs of the electronic health-record systems used to facilitate these elements.

Of the three cost outcomes they studied, the researcher said operating costs per patient per month were the "most policy-relevant" because most medical-home financing models include per-patient, per-month payments to physicians. For a typical community health center, the $2.26 extra per-patient, per-month operating cost translates into an annual expense of $508,207.

The study cited a Health Affairs report linking medical-home adoption to lowering per-patient, per-month costs by $18 due to averted hospitalization and emergency department visits—but the researchers noted that practices operating as medical homes don't necessarily get rewarded for generating these savings.

"Savings from averted hospitalization and emergency department use may be significant, yet most U.S. physicians do not have financial mechanisms in place that allow them to benefit from such downstream savings," the researchers said in the report.

This study was paid for with grants from the Commonwealth Fund, HRSA, the National Institute of Diabetes and Digestive and Kidney Diseases, and the Agency for Healthcare Research and Quality.