Transforming Primary Care Requires Fuel and Efficient Design

The transformation of primary care requires payers and players. The payers have said no so the players are too few and are often overwhelmed where the players are most needed. Primary care needs fuel and a more efficient financial design, especially in the small and rural practices and those where care is most needed. The controversies continue to hold primary care hostage, especially primary care where needed where half of Americans will reside by 2040.

The primary care financial design begins with only $500,000 to $600,000 in revenue per primary care physician as the fuel to propel the activities of primary care physicians, clinicians, and teams for a year. Unfortunately the fuel supplied is lower where primary care is most needed and is higher where contracts gain annual escalation clauses for those largest, most organized, and in locations of least workforce need. 

Recent blogs have illustrated just how much fuel is stolen and how inefficient primary care delivery has become. True Reform    Equity    Paid Less for Doing More Where Needed

Business Models for Primary Care Small vs Large       Discrimination in Payment

Associations, foundations, institutions, journals, and others cry out for solutions to workforce deficits, maldistribution, and costly inefficiencies.

• But often their solutions such as expansions of graduates add to runaway health care costs and overutilization as primary care is fixed in place and expansions add more workforce and more costs for non-primary care areas.
• The financial design does not allow distributions of dollars to the places where generalists and general specialties provide 90% of services. Only a true reform in cognitive vs procedural would redistribute dollars. This true reform has the added effect of supporting primary care, mental health, and basic services to go with better dollar distribution.
• Changes in the financial designs are opposed by the payers and the non-primary care players that do well by the current design.
• Only 6% of health spending for 55% of services in the area of primary care

So Let Us Begin the Dialing Down the Dollars Countdown - the Destruction of Health Access

About $500,000 to $600,000 in revenue is the main fuel source. About 50 - 60% of the primary care budget is personnel costs. Increases in the non-personnel areas act to decrease personnel. Increases in personnel to do non-clinical care reduces the clinical personnel area. Overall declines in revenue, increasing costs of delivery, and impacts upon productivity all hurt primary care viability and adversely impact primary care delivery capacity.

Family medicine member surveys indicate worsening of revenue with less revenue from hospital/procedural and non-office payments to go with fewer patients seen a week in the office. 

Declining Revenue and Less Payment and Lower Collections

Small practices, rural practices, practices in lowest physician concentration counties receive 10 - 20% less for the same office codes. This puts them down $50,000 to $100,000 in revenue compared to largest and most organized such as those propped up by hospital outpatient payment and those with 5% annual escalation clauses via negotiated insurance contracts (if these include primary care). 

As the percentage of family medicine in a county goes up, the concentration of physicians goes down and the payment goes down for Medicare (2011) for 99214 code from $74 down to $64 as seen in the last blog graphic. Where family physicians are over 30% of the local workforce, Medicare concentrations are highest (1.3 multiplier). Payments for private insurance also tend to be worst in these settings. 

The AAFP member surveys indicate that FM is rapidly increasing in Medicare and Medicaid proportions - not surprising because the people of lowest physician concentration counties have been fading in age and in finances. This impacts 36% of FM docs in these counties with 40% of the US pop.

Where most Americans most need care, primary care revenue adjusted for payments results in only about $500,000 per primary care physician. Equity in payment would boost this to $600,000.

$500,000 and Counting Down

Collections failure where care is most needed is a $30,000 to $50,000 greater loss per primary care doctor ($15,0000 to $25,0000 per NP or PA) as less is collected. 

This leaves...

$450,000 and Counting Down

Maintenance of Certification is $1000 to 2000 a year but has been increasing rapidly and without justification. The losses triple when considering lost revenue.

$432,500 and Counting Down

The listing of costly expenses lacking in evidence basis is long, prestigious, and heavily promoted. Digitalization and regulation has long been adding $15,000 to $40,000 per doc per year. Some years have been more costly than others:

• $400,000 and Counting Down - MGMA indicated $32,500 for HITECH over a 1 to 2 year period
• $370,000 and Counting Down - Additional digitalization, HIT, security costs, updates, maintenance
• $290,000 and Counting Down - MACRA added $40,000 for a bigger increase than usual - Health Affairs

Obviously these costs are more than can be sustained, so practices have had to sell out, close, or merge. Outside supplementation is required. Smaller practices with physicians near retirement offer few options. The populations involved are not attractive to large systems or others who might take over.

The countdown will continue to illustrate the serious issues with the design.

Turnover costs are small for the large and over $100,000 a year per doc for most needed. NP and PA turn over twice as fast compared to PC docs but this may not apply in high turnover settings. Lesser payment for NP and PA services has long contributed to departures from primary care and care where needed. 

Only 22% of physicians are in lowest concentration counties with 40% of the US along with 23% of mental health providers and 26% of active NP and PA.

The $300,000 cost of turnover for each primary care doctor with losses about each 3 years includes recruitment, retention, marketing, locums, orientation, low volume early on, adjustment costs for new physicians, benefits lost or insurance payouts.

For the purposes of countdown, half of this turnover cost of $100,000 per year results in $50,000 a year loss to the practice. This leaves

$240,000 and Counting Down

Note that communities are no longer able to prop up small practices. Hospitals have often closed or are closing - resulting in less ability to prop up primary care. Hospital losses decrease local physician concentrations - leaving mostly family practice.

$160,000 and Counting Down

PCMH is $40,000 per PC physician for the largest and 2 - 2.5 times this for smaller practices which tend to be critical for access where needed. The cost for a small practice in a needed location would be $80,000.

The countdown has obviously resulted in inability to support primary care - a reason for too few and overwhelmed.

Costs Are Increasing in the Usual Practice Budget Areas 

Costs are obviously increasing faster than inflation and in multiple dimensions. For decades supplies and equipment have increased faster for medical practices. Supplies are higher cost for the small in some part due to discounts given for those largest, most organized. Insurance goes the same way.

Payment Equity - the True Payment Reform

ACA did not take on the most important reforms such as balancing payments between basic services and those considered procedural, technical, or subspecialized. 

The academic/association/foundation/institution/corporation designers have not pushed this reform - critical for basic access to care and the ability of any training intervention to work for access improvements.

Why Promote Inequity When Equity in Payment Is Required?
Why Promote Higher Cost of Care for No Gain in Outcomes - Lower Value By Design?

Associations most connected with primary care and care where needed such as American Academy of Family Physicians (AAFP) have promoted regulation, innovation, and certification rather than opposing these measures that destabilize primary care and primary care where needed - where family physicians (and NP and PA in family practice positions) are most likely to be found. Even when family medicine residency graduates have fallen from 90% office based to less than 65% office based with worse to come, there is not a protest. Internal medicine has collapsed for primary care with hospitalist careers mopping up those who do not go on to do one or more fellowships. Even with NP and PA falling to lower proportions in family practice positions (their dominant primary care contribution), there is little protest. Even when expansions fail to result in actual primary care increases as measured over the careers of the greater numbers of graduates, there is no protest.

Accountable Care Design for Most Americans...

... requires accountability for the above for any hope of improvement for most Americans behind by design.

As the financial model fails, so does the ability of training to address deficits of workforce. This worsens turnover costs, lowers distribution, and increases the costs of incentives.

Bailouts for the Few But Not Most

Banks, large corporation, and Wall Street firms have had bailouts but there is little help for agriculture failures, manufacturing failures, and cutbacks that have contributed to economic stagnation or decline. 


There has been no bailout for 30 - 40% of Americans - no extension of unemployment. Most Americans do not rate investments. Few Americans receive the most investments. SNAP, disability, Social Security, and similar cuts represent cuts in what supports most Americans, leaving more benefit for fewer by design


Fuel is failing where fuel is most needed