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Family Medicine Pay Reform – A Suggestion

November 11, 2011
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I’m being a little facetious with this back-of-the-envelope calculation, but not much.

In several of the PCMH demonstration projects, other providers of primary care services such as WeCare, the historical record of the Starfield work, and the experience of QuadMed primary care shows that just having a typical American population shift their care from a Mr. Potato Head multi-ologist approach to a family physician-centered approach saves about 20% on overall healthcare costs. I’m not sure what an ideal family physician patient panel size is (different systems are using different numbers), but let’s use an old managed care number of 2,000 people in an FP panel. What are the cost implications?

Let’s assume this panel is 3/4 family members and 1/4 singles. The average family size is about 3.1 people, which means there are about 498 families. This leaves about 500 singles. The average cost of a family health insurance premium is about $15,000 and about $5,400 for singles (from Kaiser Foundation data). This means the grand total cost of health insurance for this population is about $10.2 million.

Now assume this total was reduced by 20%, or $2 million. Assume family physicians agree to split this savings 50/50 with society, which means they get $1 million and their patients get $1 million through reduced payments by their employers for the patients’ healthcare costs. This means a family physician’s income would rise from $170,000 per year to $1.17 million per year.

Sounds fair to me.

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2 Responses to Family Medicine Pay Reform – A Suggestion

  1. Chris Gregory on November 12, 2011 at 12:04 pm

    If you make up for the years FPs have been underpaid, seems reasonable.

  2. Robert Watkins on November 14, 2011 at 9:46 am

    Makes perfect sense to me.

    But back in the world of for-profit-non-profit insurers, the largest one in our area is now offering $2 per member per month payment for the full range of PCMH services, three year lock-in, no adjustment for morbidity, take it or leave it. Any doctor foolish enough to sign on to that would find themselves deeper in the hole than ever, but the PCMH true believers see it as a great triumph.

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