Health Reform Report June 25, 2009, 5:00PM EST

The Family Doctor: A Remedy for Health-Care Costs?

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North Carolina aside, it is tough for many doctors to focus on coordinated care when there is no mechanism to pay them for their time. A nationwide switch to medical homes is also constrained by an extreme shortage of primary-care physicians, again because of the economics. Medicare reimburses primary care at a lower rate than any other specialty, so only 17% of medical graduates choose to enter the field.

Anderson insists it is possible to set up a profitable medical home with current reimbursements, but only by increasing patient volume. In fact, he made the switch strictly for economic reasons. "Even though I was working 50 to 60 hours a week, I wasn't able to pay my bills, and one of my nurses was going to quit," he says. "I had to increase my patient load."

A few years earlier he had heard a lecture about a Kentucky doctor who was able to see 50 patients a day after converting to a medical home. The efficiencies came from relying on a team approach, where nurses take on a lot of the record-keeping once left to the doctor. Trying the same model, Anderson hired an additional nurse, added some 15 patients a day, and was able to increase his annual billings by $200,000, to $620,000. He personally earns $240,000 and works 45 hours a week.

Medical-home enthusiasts are lobbying for a change in primary-care reimbursements in any health-care bill that emerges from Congress, with a payment structure that rewards collaboration and prevention. They have a friend in Senator Max Baucus (D-Mont.), a key player in the health-care reform effort. As he points out: "Watching over a patient's full medical history... is a quality measure and a cost-control measure."

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Side Effects of "Medical Homes"

Last December the Center for Studying Health System Change (HSC), a nonpartisan policy research group in Washington, posted a detailed report on its Web site titled Making Medical Homes Work: Moving from Concept to Practice. While explaining the merits of this idea, the authors also spotlight some challenges. For example, primary-care doctors responsible for making the concept work might have to negotiate service agreements and exchange information with upwards of 200 other physicians attending to their patients.

To read more about medical homes and other ideas for health-care reform, go to http://bx.businessweek.com/us-healthcare-system/reference/

Arnst is a senior writer for BusinessWeek based in New York.