Costs of Transforming Established Primary Care Practices to Patient-Centered Medical Homes (PCMHs)

Background: The patient-centered medical home (PCMH) shows promise for improving care and reducing costs. We sought to reduce the uncertainty regarding the time and cost of PCMH transformation by quantifying the direct costs of transforming 57 practices in a medical group to National Committee for Quality Assurance (NCQA)-recognized Level III PCMHs. Methods: We conducted structured interviews with corporate leaders, and with physicians, practice administrators, and office managers from a representative sample of practices regarding time spent on PCMH transformation and NCQA application, and related purchases. We then developed and sent a survey to all primary care practices (practice-level response rate: initial recognition-44.6%, renewal-35.7%). Direct costs were estimated as time spent multiplied by average hourly wage for the relevant job category, plus observed expenditures. Results: We estimated HealthTexas' corporate costs for initial NCQA recognition (2010-2012) at $ 1,508,503; for renewal (2014 -2016), $ 346,617; the Care Coordination resource costs an additional ongoing $ 390,790/year. A hypothetical 5-physician HealthTexas practice spent another estimated 239.5 hours ($ 10,669) obtaining, and 110.5 hours ($ 4,957) renewing, recognition. Conclusion: Centralized PCMH support reduces the burden on practices; however, overall time and cost remains substantial, and should be weighed against the mixed evidence regarding PCMH's impact on quality and costs of care.