The healthcare industry operates in a unique economic niche where the “what you see is what you get” principle that governs most other consumer interactions only vaguely applies. Patients often walk into the consult room with absolutely no idea what will happen to them or how much it is going to cost, only to be surprised with punishing bills weeks after the fact.
On one hand, it makes perfect sense that healthcare doesn’t come with a price tag. After all, every patient is different, and it is impossible for a clinician to know their diagnosis before conducting a series of exams and tests, each of which may suddenly change the course of future treatment.
The delivery of personalized care is a major goal for the industry, which prides itself on providing individualized attention and a human touch in a patient’s hour of need.
But patients, especially those in for a lengthy treatment process for a chronic disease or major acute condition, want to know what they’re in for when they cross the threshold of a hospital or physician office. Skyrocketing copays and deductibles have dialed up the pressure on consumer wallets, making financial transparency an urgent proposition for healthcare organizations looking to retain market share.
Can healthcare providers offer patients a better idea of what they’re paying for while still providing high-quality, personalized, integrated care and reducing overall costs?
The answer may lie with one of the most popular new frameworks for innovative care delivery: the patient-centered medical home.
Becoming a PCMH requires a lengthy transformation process that can be extremely expensive, but the costs could be well worth it in the long run, argues Dr. Thomas C. Rosenthal, Professor Emeritus of Department of Family Medicine at the University at Buffalo.
In an editorial for the Journal of the American Board of Family Medicine (JABFM), Rosenthal says that not only does the patient-centered medical home hold the potential for overall cost savings and a higher level of quality, but it allows healthcare providers to “package” their care offerings to patients, letting consumers know exactly what they can expect from a visit to their primary care team.
By clearly defining – and hopefully meeting – consumer expectations, the patient-centered medical home may offer value for money that makes its initial investment costs worthwhile.
“In the world of business, employers and insurers are accustomed to purchasing services according to a defined package or contract,” Rosenthal writes, but healthcare is rarely so predictable. Despite “the essential role primary care plays in delivering value in healthcare,” the primary care ecosystem suffers from its perception as a “poorly defined package of services,” he continues.
The “value” delivered by the primary care provider can be measured using six broad categories, which, coincidentally, make up the basic tenets of the patient-centered medical home: increased patient-centered care access, the use of team-based care strategies, population health management, personal care management and support, care coordination, and continuous quality improvement.
Providers who undertake the process of becoming an NCQA-certified patient-centered medical home tackle each of these principles in a defined and measured way, making it clear to themselves and their patients what can be expected during any given transaction.
This translates into financial savings in several ways, Rosenthal says. Not only does standardization of primary care services make it easier for patients and providers to understand their responsibilities, but the expanded access, proactive population health management, and robust care coordination services inherent in the patient-centered medical home can also reduce pricy visits to the emergency department and unnecessary hospitalizations.
The PCMH’s potential in this area is well documented. The majority of PCMH report cards collected by the Patient-Centered Primary Care Collaborative (PCPCC) in early 2015 found that ED utilization and preventable readmissions plummeted for patients participating in a PCMH environment, while patient satisfaction scores rose significantly.
The financial picture is a little fuzzier, however. Improvement requires investment, and the ROI isn’t always immediate for providers.
A recent RAND Corporation report pinned the median annual costs of becoming a PCMH at $147,573 per practice, $64,768 per clinician, and $30 per patient, which is a hefty sum for any organization. The transformation process could take several years, even if an organization commits wholly to a big-bang implementation of the PCMH framework.
A separate study, also published this month in JABFM, showed that the average costs to apply for NCQA 2011 PCMH certification reached nearly $14000 per physician – and that is just to prepare the organization for attestation. NCQA recently updated their requirements to a 2014 edition of certification criteria.
On top of that, ongoing staffing and care coordination requirements could sap around $8600 per month from the coffers. Adding care team members, such as care coordinators, nurse practitioners, and physician assistants to cope with increased patient demand for services requires organizations to pour time and money into training and new salaries.
Maintaining PCMH certification also takes a hidden toll on providers by requiring additional man-hours for collecting and reporting on quality metrics.
But focusing on these numbers may not be taking the whole picture into account, Rosenthal points out. While encouraging patients to visit their PCMH as a first line of defense may bulk up primary care costs in the short run – by up to 30 percent, JABFM estimates – those are dollars that are not being spent elsewhere on more costly services.
“Primary care consumes six percent of the total health care budget,” he explains. “The 30 percent investment demanded to support PCMH increases primary care costs to 7.8 percent of the health care budget. Savings are realized in the 30 percent reduction in non-primary care expenditures, the other 94 percent of the total budget. That is 30 percent of a much higher number, and a good investment.”
“It also becomes obvious that financial support for a PCMH must exceed 30 percent to create the margin needed for a PCMH to flourish,” he added.
Some of this support may come from advanced population health management strategies and big data analytics technologies that can reliably identify high-risk patients and proactively deliver targeted services to them.
“The main challenge is identifying specific patients who might benefit from services,” Rosenthal says.
While physicians don’t always have the time or ability to consistently identify patients who may improve with a little extra help from community organizations or other service providers, embedded care managers are highly adept at applying population health management criteria to review and “discover” those patients, he explains.
These care managers are key to the success of the patient-centered medical home, because they form a strong foundation for the team-based care that allows PCMHs and their patients to succeed.
Dedicated care coordinators can become a first point of contact when the patient experiences a health issue, maintain higher levels of patient engagement through regular outreach and communication, and guide patients towards the most cost-effective services for their needs. A 2014 study found that patient navigators actually pay for themselves in a mere two months, which is one of the quickest returns on investment in the healthcare world.
The patient-centered medical home may not be a “silver bullet” for all of the industry’s woes, Rosenthal admits, but it does have many attractive features in its corner. Not only can team-based care raise patient satisfaction and shift utilization costs away from high-end services, but it can give patients and their providers a clearer notion of how, why, when, and where high-quality care is delivered.
As the financial responsibility of patients continues to rise, the consumerization of healthcare is likely to produce major changes in what patients expect from their caregivers and what they are willing to pay for. The PCMH may offer a way for primary care providers to get out ahead of the cost curve and position themselves as a transparent, cohesive, and coordinated epicenter for holistic care.