Patient-centric care models expensive, require advanced IT, Rand study shows

The cost to transition can be a burden for small, independent practices.
By Jessica Davis
03:26 PM
Doctor with family

High-functioning IT systems are crucial to converting a physician practice to a patient-centered medical home model, but only a third of practices examined in a new RAND Corporation study were able manage continuous investments in the necessary technology infrastructure.

Patient-centered medical homes are primary care practices that invest in patient-centric structural capabilities such as patient registries, electronic health records, health information exchange tools and analytics software. Transitioning into this care model is designed to improve care quality and efficiency, but the costs often make the transition a challenge for small or independent practices.

“For primary care practices, participating in a medical home demonstration requires substantial investments,” said Grant Martsolf, RAND policy researcher and the study's lead author. “These costs of transformation include both one-time startup costs and ongoing, every-year costs.

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“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,” he added.

Leaders from 12 practices involved in the first three years of the Pennsylvania Chronic Care Initiative were interviewed by Journal of General Internal Medicine to identify the changes practices had to undertake to support the transition to a medical home care model.

Estimates were made based on activity-based costing principles, additional personnel and other investments, for both one-time and yearly costs.

The median one-time costs equaled over $30,000 per practice: the equivalent of about $10,000 per clinician and $8 per patient. On-going costs were about $150,000 per practice: the equivalent of about $65,000 per clinician and $30 per patient.

Care management activities accounted for more than 60 percent of transformation-associated costs. The costs for clinicians and patients were greater for small and independent practices, in comparison to larger, system-affiliated practices.

Adding new staff was also a major cost associated with the transition, the study found. And only three of the surveyed practices expanded hours to increase patient care access.

“Our findings provide one of the best insights to date about the costs associated with medical home transformation,” said Martsolf. “These findings should help guide policymakers as they look for ways to encourage more medical practices to make this transition.”

Twitter: @JessiefDavis