Medical Homes. Less Demand for Acute Care Hospitals?

Preface: In my book, Obama, Doctors, and Health Reform (IUniverse, 2009), I devote several chapters to the work of Paul Grundy, MD, Director of Healthcare, Technology and Strategic Initiatives at IBM Global. Paul believes Medical Homes can transform American health care by transferring most care from specialists and hospitals back to primary care doctors practicing in “medical homes.” In the process, this transformation may “shutter” many acute care hospital – a dubious proposition in my opinion. Nevertheless, Paul’s ideas are sound and are now being set in motion in 100 demonstration projects across the U.S.

Here I reprint an October 17 blog on Grundy’s work by David Harlow, a health care lawyer and consultant who blogs at HealthBlawg.

Dr. Paul Grundy is on a mission — a mission to promote the patient-centered medical home model that he has been instrumental in developing and rolling out, in his dual role as Director of Healthcare, Technology and Strategic initiatives for IBM Global Wellbeing Services and Health Benefits, and President of the Patient-Centered Primary Care Collaborative.

I had the opportunity to speak with him last month (here’s the transcript and podcast), at the end of a day he spent in Washington, D.C., hard at work on this continuing mission.

I use the word mission because Paul frames the need for dissemination of the medical home model in terms of a transformational change in the nature of the covenant between doctor and patient — not simply a reformation. In his view, reformation without transformation creates as many problems as it solves: e.g., the primary care shortage exacerbated by increased insurance of the population at large in places like Massachusetts.

The Patient-Centered Medical Home model — described more fully in materials from the Patient-Centered Primary Care Collaborative, and TransforMED, an affiliate of the American Academy of Family Physicians — relies on a shift in physician compensation from a fee-for-service focus to a patient management focus; from an episodic focus to comprehensive, relationship-based care.

It’s been implemented in over 100 pilots around the country. Denmark learned about the model here in the U.S. decades ago and has implemented it fully across the country’s health care system, shuttering most of the acute care hospitals in the country in the process. Pilots in the U.S. include Geisinger’s, which Grundy says has been remarkably successful, yielding an ROI of over 250%, including a 12% reduction in ER utilization, a 20% reduction in hospitalization, and a 48% reduction in rehospitalization.

Technology is an important part of these efforts and savings. Even given the potential high cost of technological solutions and Health 2.0 tools, the costs pale in comparison to the $1 million-a-bed cost of hospital construction, let alone hospital staffing and other operating costs.

The key to catching up with places like Denmark and Spain, and systems like Geisinger, Intermountain and the VA, says Grundy, is the recognition and implementation of medical home-compatible payment systems by CMS, since it controls half of the country’s health care spend, and providers march to CMS’s tune. Without that buy-in, it has been difficult to promote the model beyond integrated delivery systems, large group practices, and pilot-project-funded solo and small practices.
CMS announced Medicare funding for medical home program demonstrations in the states the day after Paul was in Washington last month — coincidence? I think not! — and the concept is built into legislation percolating its way through Congress.

The model is a critical component of future improvements to our health care system; Paul Grundy and the patient-centered medical home both deserve our close attention.