Last week, the New York Times had a piece on the latest policy fad in health care: the “medical home” — “a base where doctors, staff and patients pull together as one big health-care family. Or at least that is the ideal.”
It may not be a bad idea. The article reports on an effort in Philadelphia to pay primary care doctors to oversee, in a comprehensive fashion, the health needs of their patients. It is now widely understood that today’s dominant fee-for-service insurance, especially in the Medicare context, shortchanges the time that doctors spend making sure their patients are following appropriate prevention strategies. The fee-for-service system rewards volume, not time. Consequently, there is an emphasis on diagnostic testing and procedures, not the labor-intensive task of ensuring patients stay on course with a treatment plan.
The idea of the medical home is that the solution is to pay doctors more for the time and effort needed to provide appropriate oversight of the health needs of their patients. And with more quality time from primary care physicians, there is a hope that complications from chronic illnesses will decline — as will the demand for tests and procedures. Medicare is set to begin testing the medical home concept in coming years, too.
The medical home may very well produce some positive results. But it is far from clear that the pressure for more testing and procedures will decline. Medical homes would indeed reward more primary care, but they would not necessarily alter the strong incentive for volume. Specialists and hospitals would still gain if they were able to provide more services to more patients.
A more promising approach to reforming how health care is delivered would get at the underlying financial incentives faced by doctors and hospitals by allowing them to reap the gains from more efficient arrangements.
For instance, in Medicare, beneficiaries could be given a choice of delivery systems for their health care. Each delivery system would have to include physicians, hospital care, and other services, and the presumption would be that the beneficiary would get all of their care through their chosen network. Payments would be reformed so that a large portion of the Medicare entitlement would be managed by the network on behalf of the beneficiary. The idea would be to give physicians and hospitals the incentive to reorganize themselves to be more efficient. If more beneficiaries selected such a network based on their attention to prevention and wellness, they would gain from associated drop in use of other services.
It is certainly worth testing the medical home idea. But it is unlikely to solve the underlying problem. For that, a more sweeping and difficult reform is needed, one in which consumer choice is harnessed to incent sweeping, provider-led delivery reform.