It Can Improve Quality, Decrease Costs and Increase Physician Efficiency and Income

California's family physicians project that widespread implementation of the New Model of care, recommended in the American Academy of Family Physicians' recently released 'Future of Family Medicine' financing report, would lead to significant savings for the U.S. health care system and improve the quality of care and satisfaction for patients. Financial incentives resulting from adoption of the New Model could also improve family medicine practice viability, aid access to health care, and increase interest in medical students' interest in primary care specialties. The findings are published as an online supplement to the November/December 2004 issue of Annals of Family Medicine.

New Model of care includes:

• Commitment to provide a defined basket of services
• Advanced information systems, including electronic health records
• Patient-centered care
• Elimination of barriers to access; open access by patients
• Team approach to care
• Whole-person orientation
• Focus on quality and safety
• Enhanced practice finance
• Redesigned, more functional offices
• Care provided in a community context

Macro-economic financial models indicate the New Model of care has important implications for system-wide health care spending. Because of its renewed focus on primary care services, widespread implementation of the New Model would likely result in a significant reduction in health care expenditures by all payers, according to the report. Models suggest that if all Americans used primary care physicians as their usual source of care, health care costs would likely decrease by 5.6 percent, resulting in a national savings of $67 billion dollars per year. Such savings would be accompanied by a significant improvement in the quality of the health care provided, so the New Model of care has real potential to propel the U.S. health care system toward improved performance and results that are satisfying to patients, health care professionals, purchasers and payers.

By implementing the New Model of care in the current fee-for-service system of reimbursement, financial models demonstrate that a typical five-physician practice could use the resulting increases in productivity to expand the time spent with each patient or reduce hours worked by 12 percent. Those same family physicians could increase their total compensation by up to 26 percent by working the same number of hours as before.

"This report, and the hope it holds out to California patients, family medicine and others in primary care, is just the incentive physicians need to rapidly adopt the New Model of care", said Dana Ware, MD, President of the California Academy of Family Physicians. The report demonstrates that implementing the New Model is not only good for patients, but can also remedy the disparities in reimbursement that discourage medical students from choosing family medicine and other primary care specialties. That's very important for access to care all across California, but especially in rural areas like Chester, where I practice.

"The widening gap between the cost of doing business and what family physicians are reimbursed threatens the future of the family physician workforce", Dr. Ware added. Ten features of the New Model that have a direct financial effect on practices include open access scheduling, online appointments, electronic health records, group visits, e-consultations, chronic disease management, Web-based patient information, a team approach to care, the use of clinical practice guideline software and outcomes analysis.

Mary E. Frank, MD, Mill Valley, CA, President of the American Academy of Family Physicians, said "In response to this report, the AAFP Board of Directors has approved development of a ëproof of concept, National Demonstration Project to pilot test the New Model of care in 10-20 family medicine practices of varying sizes across the country. This pilot project, along with creation of a New Model Practice Resource Center, has the potential to transform family medicine practices."

According to the report, the estimated cost of transitioning to the New Model ranges from $23,442 to $90,650 per physician, depending on the temporary productivity loss associated with implementing an electronic health records system. The authors assert that physicians could expect to recoup their share of transition costs in one to two years, and would enjoy either increased reimbursement or decreased hours of work at the same level of reimbursement thereafter.

Recommendations from the 'Future of Family Medicine' report, released as a supplement to the March/April 2004 Annals of Family Medicine, led to the formation of Task Force 6 in January 2004. The Task Force, comprised of 15 representatives with expertise in health economics, health care financing, health care policy and practice management, was charged with formulating and recommending financial models that sustain and promote thriving family medicine and primary care practices. The Task Force utilized the efforts of a national consulting firm, The Lewin Group, to develop its report.

Model assumptions were derived from the published medical literature, existing practice management databases and discussions with experienced physicians and other content experts. The work of Task Force 6 was funded by the American Academy of Family Physicians.