Estimating the Costs of Supporting Primary Care Practice Transformation

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DESCRIPTION (provided by applicant): We apply for funding for an R03 study in response to AHRQ's RFA-HS-13-003, Estimating the Costs of Supporting Primary Care Practice Transformation. While a growing evidence base is documenting the quantifiable impact of primary care transformation, the cost of implementing these transformations remains relatively unknown. The Palo Alto Medical Foundation (PAMF) is a non-profit multispecialty group practice in Northern California. Three characteristics of PAMF make it an ideal setting to estimate the costs associated with transformational primary care initiatives. First, PAMF has been successfully re-designing primary care delivery, with evidence of quality improvements, since 2000 and ten PAMF clinics have been recognized by the National Committee on Quality Assurance as Patient Centered Medical Homes. Second, being a large multispecialty practice with a multitude of payers and having physicians whose compensation reflects fee-for- service incentives make lessons from PAMF applicable to a wide range of health care delivery settings. Third, the proposed study will expand upon previous work funded under AHRQ's "Transforming Primary Care" FOA (R18 HS019167-01, P.I. Tai-Seale) and will leverage extensive knowledge about the transformation of PAMF practices, ongoing research about the impact of the transformation on quality improvements, and a network of supportive and engaged PAMF leaders, clinicians and staff. The proposed project will follow an "activity-based costing" approach to determine the costs of implementing key primary care initiatives, including but not limited to Shared Medical Appointments, Team Care for patients with chronic illnesses, and Automatic Lab Ordering via a Patient Health Record System, from the perspective of PAMF. The specific aims are to: (1) Identify the key components of the transformation process and sources of direct and indirect costs. Indirect costs involving human resources will be analyzed according to what tasks or "activities" were completed, which personnel were involved in each activity, and how much time was spent on each activity. In-depth key informant interviews with stakeholders from different levels of the organization and clinics of varying sizes will be triangulated with archival (e-mail messages, calendar appointments, meeting minutes) and quantitative data obtained from the access log in the electronic health records, employee time project codes, and payroll data; and (2) Determine the costs of the key components we identify. All costs will be priced at national market averages, and national salary data will be used to determine the costs of employee time spent on each activity. The costs will be analyzed at multiple levels: physician, clinic, division, and the organization, with a subgroup analysis of clinics serving minority and underserved patients. 1