Physician Group Lowers Cost While Improving Quality

Today’s Managing Health Care Cost Indicator is $16,000

Click image to enlarge.  Source

November’s Atlantic Monthly profiles Caremore, the California-based physician practice purchased this spring for $800 million by Wellpoint, the nation’s largest health insurance plan.  The practice cares for about 50,000 Medicare beneficiaries, and is paid through capitation via the Medicare Advantage (Part C) program.

The practice is about 20 years old, and has an impressive record of improving care while lowering overall costs.  Much of what the practice does is invest in improved care – by paying for taxi rides, doing home visits to assess risks of falls, seeing diabetics with small foot injuries every few days, and electronic monitoring of those at risk for hospitalization from congestive heart failure.

The article is heartening – the practice appears to be doing well by doing good.  These techniques have been used by groups paid capitation by Medicare for years – I remember our group in Cambridge setting up home physical therapy visits to do assessment for fall risks in the early 1990s.   Wellpoint’s purchase of this group (at an eye-popping $16,000 per patient) is market validation that this model works to improve quality and lower cost for the elderly.  Some of these lessons are applicable to those under 65, although there are far fewer very sick people in the younger population who would benefit from many of these approaches.  For instance, 30 day hospital readmission rates are 20% in the Medicare population, but only 9% for a privately insured younger population.  Remember that many of these readmissions are for planned chemotherapy or staged surgery, too.

This provides a good example that providers given a budget can manage to make health care more affordable.   That’s good news for policymakers in Massachusetts, who are pushing toward legislation to expand global payment to control health care costs.  However, expanding this approach from a niche group of providers to an entire state will be no small challenge.