Study: Patient-Centered Medical Home quality, costs linked

June 26, 2012

A study of federally funded Patient-Centered Medical Homes found a direct relationship between quality improvement scores and operating costs. Find out what it could mean to you.

Federally funded Patient-Centered Medical Homes (PCMHs) that rated higher on quality improvement measures also had higher operating costs, according to a JAMA study appearing online first.

“It is critical to understand the cost of the PCMH from the perspective of individual clinics. Such cost data are essential for practices to make informed decisions to adopt the PCMH and for policy makers and administrators to design financially sustainable medical home models,” reads background information in the article.

Robert S. Nocon, MHS, of the University of Chicago, and colleagues examined the association between PCMH ratings and operating cost in primary care practices in federally funded health centers. They surveyed administrators at all Health Resources and Services Administration (HRSA)-funded community health centers, deriving a total PCMH score and scores in six subscales:

  • access/communication,

  • care management,

  • external coordination,

  • patient tracking,

  • test/referral tracking, and

  • quality improvement.

The main outcomes they measured were operating cost per full-time-equivalent physician, operating cost per patient per month, and medical cost per visit. They included 670 health centers in the study. The final sample represents almost 6,000 full-time physicians who cared for more than 12.5 million patients nationally in 2009.

The average total PCMH score for the study sample was 60 (with a range of 21 to 90).

“In multivariate models that used total PCMH score as the medical home measure, higher total PCMH score was associated with higher operating cost per patient per month,” the authors write. “For the average health center in our study sample, a 10-point higher total PCMH score (that is, a score of 70 instead of 60 on the 100-point scale) was associated with a $2.26 (4.6%) higher operating cost per patient per month, assuming all other variables remain constant.”

The researchers also found that a 10-point-higher score was associated with higher operating cost per physician for patient tracking ($27,300 more) and quality improvement ($32,700) as well as an additional $1 to $2 in operating cost per-patient per-month for tracking and quality improvement

The higher score was inversely related to cost per physician for access/communication, which was $39,800 less.

The authors write that the effect on health center costs is significant, translating to a total increase of more than $500,000 per year.

“The cost associated with higher PCMH function is large for a health center, but that cost is relatively small compared with the potential cost savings from averted hospitalization and emergency department use observed in some preliminary PCMH studies,” they say.

“We believe payment for the medical home should be evidence based and grounded in observations of costs that accrue to each stakeholder in the healthcare system. Without such data, aggressive pressure to reduce healthcare cost is more likely to erode PCMH payment over time,” the authors say.

In an accompanying editorial, Robert J. Reid, MD, PhD, and Eric B. Larson, MD, MPH, of the Group Health Research Institute in Seattle, Washington, commented on the findings.

“In a few years, more information will become available about whether PCMHs improve care and reduce costs, key elements of their architecture, ways to redesign them to meet the needs of diverse populations, and how to efficiently integrate them into larger health systems,” they write.

PCMHs show “great potential for remodeling the lagging U.S. primary care system, which will, if strengthened, be able to provide comprehensive healthcare services to all patients,” they add.

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