How does MORE care cost LESS money?

In the short run, the amount of money doesn't change—the way it is distributed does. For this model to be implemented on any significant basis, health insurance reimbursement practices need to change. Currently, primary care physicians are reimbursed by patient encounter, which encourages one doctor to see as many patients per day as possible. The result is often exhausted doctors, jammed waiting rooms, and fragmented care with the patient doing much of the coordination himself.

Under the new Medical Home model, physicians are paid a per-patient monthly fee and reimbursed for e-mail and phone consultations, to encourage ongoing communications and build relationships.

Practices may be paid additional monies to defray the costs of implementing electronic health records and other technologies. They may also add specialists to their staffs. There may be pay-for-performance incentives to recognize improved quality of care.

In general, costs for a medical home transformation range from $23,000-$100,000 per physician.²

Critical to the success of the model is buy-in from Medicare (Federal Government insurance coverage to people who are aged 65 and over) and Medicaid (Federal Government insurance program for people with low incomes and resources) since they are such significant payers. State governments may also step in to defray the costs of implementation in the short term to gain longer-term savings. IBM has been working with agencies at both the State and Federal level to set up pilot programs and has developed solutions to support the model.

Early results show promise

Over time, with the team-based holistic approach, quality of care and outcomes can improve and costs go down. This can be as short as a year for some populations of patients.

• The Geisinger Health System in Pennsylvania reports cutting costs by 7% using the Medical Home model for 80,000 visits.³
• A Medicaid experiment in North Carolina saved the Government $162 million in 2006, 11% less than the state would have paid under the old form of reimbursement.

Is there a doctor in the house?

Advocates are hoping the Medical Home model will solve another problem: the shrinking numbers of medical students choosing primary care as a specialty. Last year, only 7% of medical school graduates chose family practice.⁴ Many parts of the country do not meet the minimum of one primary care doctor per 1,000 patients. It's not surprising. Specialists such as gastroenterologists can earn $406,000 compared to a median income of $150,000 for general practitioners.

While many doctors, insurers and employers are intrigued by the Medical Home, the biggest obstacle is lack of deployment: it is estimated that the Medical Home has been adopted by less than 1% of U.S. practices to date (based on the fact that less than 15% of practices actually have an EHR system and most of those don't meet the criteria of a medical home).⁵ It takes two to five years for a typical practice to fully convert to the model. "It's more than deploying technology and hiring specialists, it's a change in roles, attitudes and skills," says Grundy, "It's a real change in the way you practice medicine."

Under the new Obama administration, with its platform of improved and universal healthcare, advocates are hopeful that this new primary care model may finally find a home.

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² Task Force Report 6. Report on Financing the New Model of Family Medicine, http://www.annfammed.org/cgi/reprint/2/suppl_3/s1
³ Health Affairs, "Continuous Innovation in Healthcare: Implications of Geisinger Experience", 2008
⁴ New York Times, "Trying to Save by Increasing Doctor's Fees", August 22, 2008
⁵ Medical Groups' Adoption Of Electronic Health Records And Information Systems, http://content.healthaffairs.org/cgi/reprint/24/5/1323.pdf