Subscribe if you want to be notified of new blog posts. You will receive an email confirming your subscription.
The Medical Home: Advancing, But Still Many Questions
Paul Keckley and colleagues at the Deloitte Center for Health Solutions have released an important contribution to advance the dialog about the medical home (MH). It’s entitled The Medical Home: Disruptive Innovation for a New Primary Care Model. The report offers a strategic perspective on the potential for the MH to address the challenge of chronic care management.
The biggest single contribution of this report is to create a back-of-the-envelope (BOTE) economic model of anticipated costs and benefits from implementing the medical home. Here’s the bottom line:
…a systemic application of the medical home approach would need 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 to break even – a plausible amount, considering the potential avoidance of costly hospital admissions, emergency room visits and related services.
Commentary
Last year I authored a journal article entitled Disease Management and the Medical Home Model: Competing or Complementary? I’ll offer two major observations on how my thinking about the MH has advanced over the past year.
1) The MH concept is getting significant support and traction in the marketplace….more than I ever imagined. Employers and others are endorsing the concept through the Patient Centered Primary Care Collaborative; Medicare is planning a major demonstration project; major health plans are supportive and many are planning pilots.
The MH model is intuitively appealing. People are reacting positively to the idea of having one physician to provide a trusting, ongoing relationship to guide them through the crazy complexities of our health care non-system.
However…ten years ago the disease management model was also intuitively appealing to many people. Today we’re still arguing over whether DM has ROI. While being intuitively appealing is a great start, it’s not sufficient for long-term market acceptance.
2) There are many devil-in-the-details issues and questions to be resolved around the MH. The Deloitte paper raises more questions than it answers about the medical home. That’s not a comment the quality of the report (which is excellent), but a comment on the early stages of conceptualization and development of the MH model.
This economic analysis is the first I’ve seen around the MH model. It’s a rough first pass and I understand you gotta start somewhere. I’m surprised that the docs themselves have not offered their own economic model for the MH; leaving this task in the hands of outside commentators is risky. Any economic model, of course, will need validation.
Some of the questions that I’ve previously asked about the MH include:
- How will a MH be defined, recognized (e.g., see NCQA’s program), and measured? It’s becoming fashionable for everybody to say they’re a medical home these days. I joke that my dry cleaners has put out a new sign: “Dry Cleaning and Medical Home.”
- What should payment levels be for the MH?
- Will physicians invest time and $$ to participate?
- Will physicians change behavior and workflow?
- Will physicians want to collaborate with payers?
- Will the Medicare Medical Home Demo be successful?
- Will other pilot projects prove successful?
Keckley and colleagues add some important questions to the list:
- Can physicians provide care coordination services more effectively than care management vendors, health plans or hospital systems?
- With evidence-based medicine (EBM) serving as the medical home’s lifeblood, what happens if a physician practicing EBM still has a bad clinical outcome?
- The health care industry’s support structure may be deficient to facilitate medical home implementations on a large scale. Can U.S. life sciences companies scale-up medical devices, medications
and technologies to support robust care coordination? Would the exponential growth in demand for life sciences products further threaten the safety and integrity of their supply chains? - Where do care management vendors/health plans stop and medical homes start in care coordination?
- Will the various care providers collaborate or create a more fragmented market?
- Can individual medical homes offer financial guarantees to payors?
These issues will take a while to play out and resolve. Your thoughts?
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 Unported License. Feel free to republish this post with attribution.
This paper from our smart colleagues at Deloitte is indeed timely. The BOTE analysis of the cost avoidance required to make this a viable option is truly a “first generation” attempt, but it should open the eyes of regulators, legislators, and payers who believe that this approach will be a panacea for American Medicine. Unfortunately, unless there is a significant “segmentation” of the typical primary care panel, and a medical home payment only for those with existing, and importantly, IMPACTABLE, high cost conditions, there may never be a real business case for this model. To date, I have seen fees such as $5 per member per month as the additional payment for a medical home care coordiation. Under the BOTE model proposed, that would mean that a payer would realize a 30:1 return on their incremental cost! My conclusion is that we have a long way to go to define the “value proposition” of the medical home, and perhaps that needs to start with a business case of what incremental services at what incremental cost would be expected to deliver what incremental savings for which specific patient groups. Sounds like DM 101 all over again! Haven’t we learned that “too good to be true” usually is?
Let’s assume what you are saying about saving $150 per patient per month is correct, this is should be a very achievable target. I don’t have true cost of accommodation in a hospital but safe to say that it runs into the hundreds of dollars per night. So in my mind it is an absolute must that we invest in the home care project in order to give better care to the elderly and to reduce costs. I know that the amount of home care is growing, but I question the real commitment by the health service to make it work on a larger scale.
Unfortunately, unless there is a significant “segmentation” of the typical primary care panel, and a medical home payment only for those with existing, and importantly, IMPACTABLE, high cost conditions, there may never be a real business case for this model. To date, I have seen fees such as $5 per member per month as the additional payment for a medical home care coordiation. Under the BOTE model proposed, that would mean that a payer would realize a 30:1 return on their incremental cost! My conclusion is that we have a long way to go to define the “value proposition” of the medical home