Team-Based Primary Care Cuts FFS Healthcare Revenue by 2.5%

August 10, 2016 - As healthcare providers continue to transition to value-based care, many hospitals and physician practices have focused on how to improve care coordination and team-based approaches to improve patient outcomes and boost their healthcare revenue cycle.

However, team-based care may not be financially beneficial for primary care physicians that still receive most of their claims revenue from fee-for-service payment models, according to a recent study in the American Journal of Managed Care.

To treat patients with coronary heart disease, the net cost for providing team-based primary care was $291 per patient over one year despite reducing the risk of cardiac events, resulting in a 2.5 percent loss of primary care revenue.

Using billing data and observation logs from five clinic sites, researchers found that a team-based approach to primary care was able to reduce the risk of cardiac events for patients with coronary heart disease, but primary care practices did not receive the savings from improving patient outcomes.

“In the current payment system...all of the costs, and none of the savings from team-based care, are borne by primary care,” wrote the authors of the study. “This suggests that primary care practices will not adopt team-based care and their patients will not experience the benefits until new payment models are developed and implemented.”

Researchers revealed that the average revenue per patient visit declined under a team-based approach. While the study stated that team-based care for coronary heart disease patients resulted in a 5.7 percent increase in revenue per total visits and a 1.4 percent boost in revenue per procedure, the approach decreased overall revenue for more general patient visits and services.

Before implementing the new strategy, patients visited the primary care office an average of 9.2 times with 4.4 of those visits being with a provider. The average revenue generated from these visits was $878 per patient.

After implementing team-based primary care, the average number of visits decreased by five percent and the median number of visits with a provider declined by eight percent. The reduction in visits resulted in an 11 percent decrease in average revenue.

According to the study, primary care practices also experienced the following:

• Average revenue per office visit decreased by four percent from $109 to $104

• Average number of procedures performed declined by six percent from 21.8 to 20.6

• Average revenue per procedure fell by three percent from $44 to $43

• Average number of laboratory tests per patient decreased by 17 percent from 9.7 to 8.1

Even though the team-based primary care program was able to save money and improve outcomes for patients with some chronic diseases, the net decline in revenue per patient was 2.5 percent.

“In this trial of team-based primary care in five clinic sites, we were able to demonstrate an improvement in LDL-C [low-density lipoprotein] control and an increase in the rate at which aspirin use was documented,” the study stated. “However, we were unable to create a system that would be revenue-neutral or revenue-positive for the primary care practice that is providing the service.”

The study also showed that team-based care approach utilized more resources in the primary care practice. Staff on the primary care team spent 6,856 hours treating patients with the chronic disease with 91 percent of the hours dedicated to direct patient care activities. By calculating the employee compensation, the increase in hours resulted in a negative financial impact on the primary care practice.

Additionally, clinics in the study hired a registered nurse care manager to coordinate the primary care team program. While the care manager’s salary was paid for by the study’s sponsor, the individual spent most of her time on administrative tasks.

The registered nurse care manager’s time was primarily spent updating the registry (25 percent), charting (25 percent), and attending, preparing for, and traveling to patient care meetings (18 percent). More direct patient care, such as discussing patient care, placing orders, requesting records, and reviewing charts, consumed less than ten percent of her time.

To realize healthcare savings from using a team-based care approach, researchers advised primary care practices to participate in shared savings payment models, such as accountable care organizations. Since the study proved that a primary care team could reduce the overall costs of treating patients with chronic diseases, providers in a shared savings model could receive a portion of the healthcare savings.

“The average annual cost of implementing team-based care in our trial for a patient with CHD [coronary heart disease] could be recovered by an accountable care organization if team-based care reduced the total cost of treating a patient who has CHD by as little as two percent,” the study concluded.

However, the study stated that many primary care providers may not adopt team-based care strategies until new alternative payment models are developed or existing models become more convenient to implement. By neglecting the team-based approach, though, patients are unlikely to see the benefits of more coordinated care.

Dig Deeper:

• What is Value-Based Care, What It Means for Providers?

• Is Primary Care’s Role Keeping Up with Health Demographics?