The Patient-Centered Medical Home: Prospects for Individual and Small Provider Groups

With a growing shortage of primary care physicians (PCPs) and an increased prevalence of chronic disease among patients in the United States, the Patient-Centered Medical Home (PCMH) has become an ideal 21st century model for primary care. It promises to “strengthen the physician-patient relationship by replacing episodic care based on illness and patient complaints with coordinated care and a long-term healing relationship.” In this model, each patient has access to a single, personal physician, and develops an ongoing relationship with this provider, allowing the physician to assume responsibility for their health care needs. The providers and their staff form the physician-led medical team, dedicated to enhancing care through increased access, open scheduling and communication, transparency and accountability, resources for improved patient decision making, and appropriate referral when necessary. Utilizing the successes of providers such as Group Health Cooperative of Puget Sound, this model focuses on “whole patient orientation” in an effort to anticipate the needs of the patient instead of reacting to crises, thus decreasing waste and preventable medical emergencies.

Providers may become accredited PCMHs through the National Committee of Quality Assurance (NCQA), allowing them to distinguish themselves as optimal providers in the market, as well as receiving increased reimbursements for services from some payers. Any PCP-directed medical practice can request a survey and apply for accreditation from NCQA; even individual physician practices may qualify as PCMHs. However, to achieve the high standards required for accreditation, these practices would require significant resources to acquire the technology and staff necessary for enhanced clinical integration. The largest medical groups have demonstrated the best ability to adapt to this model nationally, but primary care in the United States is dominated by small PCP practices. In a 2009 survey of family practice physicians in Virginia, only 1% of the provider groups exhibited all elements critical to the PCMH model, and fewer than 40% reported use of electronic medical records (EMRs). Since the NCQA guidelines focus heavily on EMR use and reporting for quality improvement, most providers would require significant funding to transform into an NCQA accredited practice. Some estimate this transformation might require between $80,000 and $120,000 upfront per clinician. With this low percentage of PCMH-ready provider groups and the significant resources needed to achieve model guidelines in mind, this report briefly reviews the fiscal viability of individual and small group providers to become NCQA accredited.

Most research has relied on surveys to assess the readiness of the organizational structures of primary care practices for PCMH implementation. These studies appear congruent. In a statewide survey of primary care clinicians in Massachusetts in practices ranging from 2-74 physicians (median = 4), similar results were obtained in comparison to Goldberg et al in Virginia. Larger practices were significantly more likely than smaller practices to have the tools necessary to implement PCMH technologies and enhanced care. Specifically, “larger practice size and network affiliation were both associated with higher prevalence of capabilities in 3 domains of improvement: feedback and improvement infrastructure, linguistic capabilities, and EHRs,” all key elements of NCQA standards. Thus, individual physicians and physician groups will require much more support and funding to achieve NCQA accreditation. Other research specifically related to quality improvement and EHRs further strengthens this hypothesis: the smaller the practice, the less likely it is to be capable of immediately adopting PCMH elements.

The Deloitte Center for Health Solutions (the “Center”), part of Deloitte and Touche USA LLP, recently examined the medical home model, estimating both startup costs and potential savings. The Center looked at the current state of primary care, contrasting it with its future in the PCMH model. The Center’s estimates for achieving the PCMH model require more patient visits, the addition of “health coaches” and other staff, physician incentives and performance bonuses, and a one-time investment of approximately $100,000 for EMR infrastructure, plus hundreds of thousands of dollars each year to manage IT systems, data, and technical support. With this fiscal budget in mind, a practice would have to “reduce annual net costs by at least $148,347-$163,347 per primary care physician to break even. For a panel of 1,000 patients who need care coordination, net costs for health services must be reduced by at least $150 per patient per month.” The Center notes that this may indeed be feasible, given the savings from reduced hospital and emergency department admissions (assuming proper incentives). Thus, the PCMH model could more than pay for itself over the long run, so long as the initial capital investment could be managed.

Small primary care practices may find their path toward NCQA accreditation blocked due to fiscal constraints. According to the Center, individual physicians would need to invest approximately $150,000 each year to sustain a PCMH (after the one-time ~$100,000 investment in health information technology). This would most likely require assistance from strategic partners, and “the projected risk level for an individual clinician could be high relative to the return unless the physician is part of a community based care management model supported through a strategic collaboration among local payers and a community-based health information exchange.” This high associated-risk inevitably would make it difficult for small practices to be moved toward the PCMH model.

Current PCMH demonstrations, including over 14,000 physicians caring for nearly 5 million patients, have seen “median incremental revenue per physician per year [at] $22,834 (range $720 to $91,146),” so there is indeed a fiscal incentive for physicians to move to the PCMH model. However, these demonstrations do not exist in a vacuum. This model requires collaboration among physicians, payers, and patients, as well as federal support. Significant capital would be needed for any practice to achieve NCQA accreditation, and smaller groups would find this move exceedingly difficult without the addition of other stakeholders. Yet if primary care can move toward this patient-centered model, physicians, patients, and payers combined could see significant cost-savings and enhanced care.


(sources available upon request)