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Patient-Centric Care Models Require Substantial Investments in IT and Staffing, Rand Study Shows

January 12, 2016
by Heather Landi
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There are substantial costs involved with transitioning primary care practices into a patient-centered medical home model, which may be a burden to small and independent practices wanting to make the shift, according to a new study from the Rand Corporation.

The study, published online by the Journal of General Internal Medicine, examined twelve practices that participated in the first three years of the Pennsylvania Chronic Care Initiative (PACCI), a statewide multi-payer medical home pilot. Leaders from these practices were asked about changes made as a result of the switch and the cost involved. The aim of the study was to shed light on the cost of necessary investments, such as new structural capabilities, like patient registries and information technology, often required by primary care practices participating in medical home initiatives.

Rand Corporation researchers found that care management activities, such as hiring care management staff to help better coordinate patients’ care, accounted for the greatest transformation-associated costs. And, the study found that per-clinician and per-patient transformation costs were greater for small and independent practices than for large and system-affiliated practices.

As part of the study, researchers looked at one-time and ongoing yearly costs attributed to medical home transformation. Practices incurred median one-time transformation-associated costs of $30,991 per practice, or equivalent to $9,814 per clinician and $8 per patient, the study release states. And, median ongoing yearly costs associated with transformation were $147,573 per practice, equal to $64,768 per clinician and $30 per patient. Care management activities, which typically involved hiring one or more care managers to better coordinate patient care, accounted for more than 60 percent of practices’ costs.

And, the costs varied widely, with start-up costs ranging from $7,694 to $117,810 per practice and annual expenses ranging from $83,829 to $346,603 per practice. The cost per clinician was highest for small medical practices.

“While there are financial incentives available to practices that make the shift, such investments might be especially challenging for small practices and those not associated with a larger health network, since they had higher transformation costs per clinician,” Grant Martsolf, the study’s lead author and a policy researcher at Rand, said in a statement. “Tailored subsidies from payers could help small and independent practices make these investments.”

Nearly all of the practices surveyed reported that high-functioning information technology systems were critical to providing patient care, but only four practices made ongoing investments in information technology specifically related to their medical home transformation. Only three of the practices surveyed expanded hours to improve patient access to care.

“These findings should help guide policymakers as they look for ways to encourage more medical practices to make this transition,” Martsolf said.

Support for the study was provided by the federal Agency for Healthcare Research and Quality.



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