PCMH model unlikely to yield cost reductions

June 4, 2014

Study of VHA facilities shows costs of transition not balanced by savings

The patient-centered medical home (PCMH) model may well bring benefits to the nation’s healthcare system, but reducing the cost of care is not likely to be among them.

That finding emerges from a study of costs and utilization at Veterans Health Administration (VHA) clinics around the country before and after the VHA’s decision in 2010 to implement its Patient Aligned Care Teams (PACT) initiative, which is similar to the PCMH model. Results of the study appear in the June, 2014 issue of Health Affairs.

After examining data from the years 2003 through 2012, researchers concluded that the savings from the PACT initiative were less than what the VHA invested in it, while adding that ongoing trends in costs and use are “favorable.”

The PACT initiative was designed to make primary care through the VHA more comprehensive, longitudinal and patient-centered. Under the model, each primary care provider-either a physician or a nurse practitioner-leads a team that includes a registered nurse care manager, a medical assistant and an administrative clerk. In addition, each VHA facility hired a cross-team health promotion specialist and health behavior coordinator.

PACT also expanded an earlier VHA initiative designed to integrate mental health and primary care by locating mental health professionals in primary care facilities to address issues such as depression, post-traumatic stress disorders and substance abuse disorders.  In all, the VHA spent $774 million on PACT, which included the hiring of an additional 1,271 registered nurse care managers.

The researchers looked at results for the five million VHA patients enrolled in primary care when the PACT initiative began, focusing on eight measures they believed would be affected by the initiative. Three of those were found to be statistically significant: hospitalizations for ambulatory care-sensitive conditions and outpatient visits with mental health specialists decreased, and primary care visits among patients aged 65 and older increased significantly.

The authors estimate that the changes in utilization resulting from the PACT initiative saved the VHA system $559 million, resulting in a net loss to the system of $178 million. The savings were due largely to a reduction in specialty mental health benefits.

“This suggests that an organization’s decision to adopt the PCMH model should be based not upon unrealistic expectations of substantial costs savings, but upon expected benefits, such as improved quality of care and high satisfaction with care,” the authors conclude.

The study’s findings are consistent with those of studies of other PCMH initiatives, such as the Group Health Cooperative pilot home, and Geisinger’s advanced medical home initiative, both of which were, like PACT, part of integrated health systems.