Volume Impact: How will PCMHs Affect Downstream Utilization and Referrals?

Evidence from medical home (PCMH) pilots suggests that reductions are on the way for specialty and hospital services, and that integrated health systems should look to other avenues to make PCMHs financially sustainable.

Bottom line up front: Volume reductions likely 

We received several questions recently from health system leaders asking whether there might be a volume upside for specialist and hospital services affiliated with PCMHs. This is a good question because certain aspects of the PCMH -- for example, changed referral patterns or increased patient screening activity -- might seem to translate into increased downstream volume. 

But despite a couple of documented cases to the contrary, most evidence from pilot sites points toward reduced downstream utilization (which makes sense under the theory of accountable care). 

Future declines would be driven by two main factors:

• Services being rendered unnecessary as patients are kept healthier through compliance with primary care EBM
• Some traditional specialist visit types shifting to PCPs

One silver lining from a specialty/hospital business perspective would be a higher-complexity case mix for specialists, since the less complex visits would be the ones shifting to PCPs. Also, to a certain extent, PCMHs could be leveraged to capture incremental market share that would backfill new cases into the system.

Anecdotal evidence of PCMH-linked upticks in downstream utilization 

Group Health's PCMH reported sites about 5% more specialist encounters than control sites, but the differences between sites appeared to decline over time (Source: Reid, R. "The Group Health Medical Home At Year Two: Cost Savings, Higher Patient Satisfaction, And Less Burnout For Providers", Health Affairs, May 2010)