- Transforming a primary care practice into a patient-centered medical home (PCMH) is a costly endeavor — to such an extent that the financial challenge may prevent small and independent practices from making the shift, according to a new RAND Corporation study. The research highlights the investment costs associated with use of patient registries, electronic health records systems and other advanced IT capabilities designed to help practices provide comprehensive, personalized, team-based care.
The study, published online by the Journal of General Internal Medicine, is one of the first to assess the costs associated with converting a medical practice to a PCMH, according to RAND. It examined the experiences of 12 primary care practices that took part in the Pennsylvania Chronic Care Initiative (PACCI), a statewide multi-payer medical home pilot program.
“For primary care practices, participating in a medical home demonstration requires substantial investments,” said Grand Martsolf, the study’s lead author and a policy researcher at nonprofit RAND, in a public statement. “These costs of transformation include both one-time startup costs and ongoing, every-year costs.”
RAND researchers surveyed leaders from a dozen practices that took part in the first three years of PACCI. Questions focused on changes made as a result of practice transitions to medical home and the costs involved.
Among the practices studied, the median one-time costs of transforming to a medical home were $30,991 per practice —equivalent to $9,814 per clinician and $8 per patient, the survey report states. Ongoing costs were significantly higher — a median level of $147,573 per practice per year, or $64,768 per clinician and $30 per patient yearly.
At the endpoints, start-up costs ranged from $7,694 to $117,810 per practice, with annual expenses ranging from $83,829 to $346,603 per practice. The cost per clinician was highest for small practices, according to RAND.
“Nearly all of the practices surveyed reported that high-functioning information technology systems were critical to providing patient care, but only four practices made the ongoing investments in IT specifically related to their medical home transformation,” a RAND statement says.
The study found that care management activities, which typically involved hiring one or more care managers to better coordinate patient care, accounted for over 60 percent of practices’ transformation-associated costs. Overall, per-clinician and per-patient transformation costs were greater for small and independent practices than for large and system-affiliated practices.
“Our findings provide one of the best insights to date about the costs associated with medical home transformation,” added Martsolf. “These findings should help guide policymakers as they look for ways to encourage more medical practices to make this transition.”
In particular, Martsolf said that tailored subsidies from payers could help small and independent practices with their medical home investments. Smaller practices and those not associated with a larger health network had higher transformation costs per clinician, according to the study’s results, making appropriate investments especially challenging.
Noted limitations of the study included potential error in interviewee recall regarding cost estimates. In addition, the study was constrained to PACCI; transformation costs in other medical home interventions may be different, the study report states.