Study: Patient-Centered Medical Home Model Raises Costs

Community health centers funded by the US Health Resources and Services Administration that have higher patient-centered medical home (PCMH) model of care ratings have higher operating costs, according to a study published June 2012 in the Journal of the American Medical Association.

This finding is contrary to claims made by many PCMH-supporters who state the care model reduces costs for providers. Although use of the PCMH care model does incur savings as a result of reduced hospitalizations and emergency department visits, these savings do not have a significant impact on physician providers, the study’s authors state.

In order to offset the additional spending necessary for physicians to sustainably implement an improved patient-centered care delivery model, federal  financial incentives must be developed to support the PCMH model, the study’s authors say.

According to the study, the PCMH “is a model of care characterized by comprehensive primary care, quality improvement, care management, and enhanced access in a patient-centered environment.” In order to understand the full correlation between provider adoption of this care model and their overall operating costs, the study surveyed  699 federally funded health centers. The authors then used the collected data to evaluate each center and assign a rating on a 100-point scale, assessing key PCMH care features such as access/communication, care management, external coordination, patient tracking, test/referral tracking, and quality improvement. Centers were then assigned an overall rating.

Using the 2009 Uniform Data System reports that had been submitted to the Health Resources and Services Administration, study authors determined operating costs and compared them with each facility’s assigned ratings. The study used three different cost variables: operating costs per full-time physician, operating costs per patient per month, and medical cost per visit. According to the study, “operating cost per patient per month may be the most policy relevant because many of the financing models for the PCMH include per-patient, per-month payments to physicians.”

Health centers with higher PCMH scores had higher operating costs as well. A 10-point higher overall PCMH score was linked to about a 4.6 percent higher per patient per month operating cost, according to the study. This increase represents an annual increase in operating costs of over $500,000.

1 Comment

  1. It’s unsurprising that PCMHs incur higher costs–it takes time and effort to coordinate care. PCMHs receive a per-member, per-month care coordination fee from the insurance payers for their covered members.

    What’s important is that the PCMH is able to reduce the patient’s overall costs–in large part through avoiding hospital visits, but also through coordinating care (preventing duplicate services, sending patients to facilities with lower charges, etc.).

    In a recently published study, one insurance payer reported a 250% – 400% return on investment on its PCMH spending.

    More thoughts on PCMHs (and why they are a viable alternative delivery model for better care at reduced costs) here: Patient-Centered Medical Homes: A Private Practice Solution to Better Care and Lower Costs

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