Editor’s Note: The post below by Arnold Milstein is published in tandem with the release of Health Affairs’ Sept-Oct. 2008 issue, a thematic volume titled “Overhauling The Delivery System” that focuses on medical  homes, retail clinics, and other models of health care delivery innovation. Future articles by Milstein will identify the four medical practices he refers to in his post and will discuss their individual characteristics.

The primary objective of the medical home being defined by physician organizations and accreditors is quality improvement; but unless medical homes also fulfill their considerable potential to reduce total per capita health spending, they will elude the financial reach of many adults in the lower half of the income distribution. An increasing fraction of these adults can no longer afford their current share of health insurance premiums and average point-of-service cost sharing, especially if they are chronically ill, and most do not qualify for Medicaid coverage. Medical homes that fail to substantially reduce total per capita health spending will also find it difficult to persuade public- and private-sector purchasers to support substantial new medical home fees.

Lower-income adults and employer, union, and government health benefit program sponsors need the medical home to be a “medical home run” — a care delivery innovation that substantially reduces near- and long-term total health care spending while improving quality of care. Medical homes can be medical home runs; but I worry that most won’t be.

My concern is partly because medical homes are not being explicitly designed for this purpose, and partly because the near-term cost of correcting underuse is likely to substantially exceed savings from eliminating overuse. Ironically, my strongest concern originates in my observations of several exceptional existing primary care practices that are indeed medical home runs.

Scouting For Existing Medical Home Runs

With support from the Robert Wood Johnson Foundation, the California HealthCare Foundation, and employee health plan sponsors, I scouted for and found four primary care physician-led practices with average or above-average quality scores whose care enables their patients to consume 15-20% less total payer spending per year on a risk-adjusted basis than patients being treated by regional peers. Mobilizing impressive business ingenuity, they achieved this result in a U.S. payment environment that typically punishes physicians who invest to prevent costly near-term health crises. I found them in both large and small physician practices in Massachusetts, Florida, and California. I am certain they exist elsewhere.

If the ingredients and accomplishments of these four medical home runs rapidly spread, many underinsured and uninsured lower-income Americans could be covered without increased health care spending or lower quality of care. In addition, health benefit plan sponsors would gladly support the higher primary care physician payments that were required to attain such results.

However, these four physician practices contain two key features that are not well addressed in current medical home blueprints: personal zealotry in preventing urgent and emergent hospitalization for chronic illnesses; and equally zealous concentration of referral care with high-quality medical specialists who are sparing in their use of “supply-sensitive services,” as defined in the Dartmouth Atlas.

Personal Zealotry In Preventing Unplanned Hospitalization For Chronic Illness

All four primary care medical home runs operate as de facto “hospitalization prevention organizations” for their chronically ill patients; they make prevention of unplanned hospitalization of these patients a primary objective; and they redesign their practice models accordingly. A key element of this prioritization is clinical mindset; the physicians and their office staff regard urgent and emergent hospitalizations for patients with chronic illnesses as personal and organizational failure events, study their root causes, and evolve their practice model to prevent recurrence.

While the specific clinical innovations to prevent unplanned hospitalizations vary somewhat across the four practices, they converge in two ways. At least one primary care team member demonstrates saliently to each chronically ill patient that they care deeply and personally about them and protection of their health. This includes mobilizing family members, social services, and other resources required for successful patient self-management. In addition, as soon as a chronically ill patient senses impending health crisis, a member of the health care team familiar with their history is readily reachable and prepared “to go the extra mile” to prevent hospitalization, including actively coordinating with ER physicians and hospitalists in exploring alternatives to hospitalization.

An attitude of “protection of your health matters to me personally” and “I’m prepared to invest special effort to spare you a health crisis” was memorably captured in Atul Gawande’s 2004 New Yorker magazine portrait of Dr. Warren Warwick in The Bell Curve. It is the exception rather than the rule in American health care delivery. Because it reflects a personality characteristic of clinical team members rather than a readily teachable behavior or a structural enhancement of a primary care practice, assuring this expression of patient-centeredness requires new selection criteria for medical home team members serving the chronically ill. Given the prolonged time frames required to correct failure to integrate robust patient-centeredness into medical student selection and into graduate and postgraduate physician training, near-term improvement implies selecting for this attitude among nonphysician team members. Other organizations, such as the retail giant Nordstrom, have shown that selecting employees for high natural service orientation is feasible.

Concentrating Referral Care With High-Quality, Conservative Medical Specialists

Current methods of comparing specialists on quality and total spending per episode of acute illness care and per year of chronic illness care are imperfect. Nonetheless, each of the four primary care medical home runs used available performance assessments of specialists on quality and total cost of care in order to concentrate specialist referrals with one well-performing specialist or specialist group per specialty. In two of the medical home run practices, conservative resource use by these specialists was reinforced by payer capitation payment of specialists.

An estimate of potential health care spending reduction associated with preferential use of such highly ranked specialists in Seattle — a low-spending Dartmouth Atlas region — was prepared by Mark Rattray, M.D. He found no relationship between low spending and quality for care delivered by non-primary care specialties. When he modeled savings from preferential referral to the low-spending specialists with above-average quality scores, he found that the opportunity for savings constituted approximately 15% of total payer spending controlled by specialists. The savings opportunity is likely greater in higher-spending Dartmouth Atlas regions.

Concentration of referrals also enables more effective care via greater standardization of treatment protocols among physicians treating the same patient, more reliable transfers of patient information between primary and specialist care, and greater clarity regarding the division of responsibility among physicians involved in a patient’s ongoing management.

Closing Comment

If medical homes deliver better quality without increasing total health care spending, they will generate social benefit. Social benefit will also increase if medical homes shift physician payments toward primary care. However, for medical homes to profoundly benefit nonaffluent adults who do not qualify for Medicaid and to persuade most purchasers to pay higher medical home fees, they must also lower total near-term health care spending. To achieve such home run status, medical homes’ design, certification standards, and criteria for reward from payers must explicitly incorporate features from existing primary care practices that achieve low total cost of care and favorable performance on other domains of quality. Observation of four such practices suggests that these design features are likely to enhance, rather than to conflict with, current principal medical home quality objectives of improved access, patient-centeredness, and effectiveness of care.

While they cannot alone solve our health care affordability challenges, medical homes can substantially reduce total near-term health care spending in addition to raising quality of care. Today, roughly 60 million uninsured and underinsured lower-income Americans need physician and health plan leaders to jointly pursue this higher aspiration for medical homes. Their numbers and preventable health deterioration will continue to mount.