Studying the Financial Impact of Practice Transformation

Publication of results from TransforMED's National Demonstration Project (NDP) began last week with the article, "Initial Lessons From the First National Demonstration Project on Practice Transformation to a Patient-Centered Medical Home" in the May/June issue of Annals of Family Medicine.TransforMED launched its two-year National Demonstration Project in 2006 and included primary care practices from around the country, studying the process of transforming to a Patient-Centered Medial Home. Additional articles on the outcome of this one-of-a-kind national study will continue to be published, including an extensive supplement to AFM scheduled for publication later this year. Congruent with the efforts of the NDP evaluation team, TransforMED has studied targeted financial data gathered from the NDP practices. The data demonstrate some critical findings about the impacts of practice transformation.

There has been debate about whether small to medium sized practices can transform to a patient centered model of care. The answer from the NDP is a resounding "Yes!"   There has also been an ongoing question about whether small to medium sized practices can implement an Electronic Health Record system effectively and efficiently. Again the evidence from the NDP is a resonating "Yes!"

Another national discussion is whether primary care practices can afford to transform; calling into question the financial impact on practices.  The Evaluation Team's analysis of the NDP indicates that primary care practices can make substantial progress toward implementing components of the Patient-Centered Medical Home model. TransforMED's analysis of financial data gathered throughout the study reveal that they can do so while improving the finances of the practice as well as physician salaries. It is worth noting that about 70% of practices had an implemented EMR at the beginning of the project, and as a result many of the practices were also implementing EMR systems during the NDP. The analysis of financial data from the NDP demonstrates that practices do not have to experience a reduction in practice revenue as a result of meaningful practice transformation.  In fact, the average NDP facilitated practice revenue increased 10.49% and 2.43% in the self-directed practices. Furthermore, physician salaries increased nearly 14% in facilitated practices and 13% in the self-directed practices. It can be deduced that the revenue and salary increases reflect increased efficiency because physician salaries actually rose at a greater percentage than the practice's increase in revenue.

These data demonstrate that primary care practices can accomplish meaningful, extensive practice transformation. Adequate attention to the "business of medicine" and effective practice management can lead to improved revenue and increased efficiency thus allowing the practice to absorb the cost of change and technology while improving the bottom line. Future data will most likely continue to demonstrate improved practice revenue and physician income as practices move past the challenges of transformation while providing solutions to the challenges facing the US Healthcare system.

Initial Lessons From the First National Demonstration Project on Practice Transformation to a Patient-Centered Medical Home May 18, 2009 UPDATE Nutting article "misunderstood" The recent article by Nutting et al does seem to have been "misunderstood – by the press and policymakers" as Dr. Paul Grundy and other point out in the comments section of Annals of Family Medicine and this BNET blog. May 12, 2009 Annals of Family Medicine By Paul A. Nutting, et al In addition to sharing their observations and summarizing the early process-evaluation lessons, the NDP evaluators offer critical lessons, health policy recommendations and four important suggestions for practice leaders considering practice transformation. Read the preliminary report from the evaluators of TransforMED's NDP »