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How Dean Clinic Redesigned Primary Care

 |  By Jim Molpus  
   April 22, 2013

This article appears in the April 2013 issue of HealthLeaders magazine.

Editor's note: This piece is excerpted from a full case study that is available as part of the upcoming May 21 event, HealthLeaders Media Live from Dean Clinic. For more information, visit www. healthleadersmedia.com/live.

One of the beauties of running an integrated delivery system that has physicians, a health plan, and affiliated hospitals is the ability to look at influencers of healthcare costs in a systematic way. Craig Samitt, MD, president and CEO of Madison, Wis.–based Dean Clinic, says a few years ago he asked the organization's health plan to pull some data on primary care.

"We asked our health plan what percent of total cost of care goes to pay primary care, essentially to pay primary care physicians," Samitt says. "We were shocked to hear that it was only 6% of the total cost of healthcare. And then we asked our health plan to what degree does the work of primary care—referral patterns, prescribing, everything that they do—influence the remaining 94%. And the health plan said our primary care physicians directly and indirectly drive another 80% of the costs. So if you're going to start some place to catalyze value-based transformation, primary care is the best possible place to start."

In 2009, Dean Clinic was not getting the kind of quality and experience results it wanted from primary care, says Mark Kaufman, MD, chief medical officer for Dean Clinic. At that time Dean's primary care network was not unlike others across the country—somewhat fractured, with difficulty in recruiting physicians and keeping patients happy.

"We said we really needed to make this a major effort," Kaufman says. "I think primary care redesign is one of if not the most critical pieces of clinical redesign that a health system has to undertake if you're going to get to that goal of flipping the paradigm from a sick model of care to more of a wellness and maintenance model of care."

The first step was to concentrate on six primary care pilot sites in a patient-centered medical home pilot project with TransforMED, a subsidiary of the American Academy of Family Physicians.

"It was a way to get started," Kaufman says. "It was a bit messy. In retrospect it wasn't data-driven enough, but a couple of really good things came out of that."

The pilot sites—which included 30 physicians at five Dean Clinic locations and one that is part of Dean's joint venture with St. Mary's Hospital—reached Level 3 PCMH certification for the National Committee for Quality Assurance program, which includes such foundations as access and communication, use of paper or electronic charting tools to organize clinical information, and adoption and implementation of evidence-based guidelines for three chronic conditions.

The other real benefit was a new physician compensation formula meant to align physician performance with the goals of value-based care, and not by volume. Five years ago, Dean's PCPs were compensated on the industry standard relative value unit (RVU) formula, in which a standardized dollar amount is given for each encounter or procedure. Dean initially had introduced a 2% incentive for patient satisfaction, but as part of the PCMH pilot, leaders radically redesigned the formula, Kaufman says.

Under the new compensation formula, 60% of primary care compensation was still RVU-based; another 20% was based on age/gender-adjusted panel size; and 35% was built around incentives for service, financial performance, clinical quality, and growth goals. The formula intentionally totals 115%, Kaufman says. "We purposely made it possible for our physicians to earn above market compensation, but the way our physicians did that was by performing well on the incentives that were really all about the goals of primary care redesign."

The formula has been tweaked in recent years and has been spread beyond the six pilot sites to the rest of Dean's primary care system. For 2013 the package is 50% RVU-based, 30% for panel size, and up to 30% for incentives, including 10% related to medical cost control and a 20% standard package.

Albert Musa, MD, medical director for primary care, east region, for the Dean Clinic, says the reaction to the new comp plan has been well received by the primary care staff but is still a work in progress.

"You know, it actually has been good," Musa says. "Our physicians knew it was aligning them more with the right things."

 But there are limits and practical challenges, he says. "When you're doing more non-RVU work and you're getting less for RVU work, you can only scale back your RVU work to a certain point." Other questions leaders found along the way include how best to balance the panel size for each physician and how to divide that care among different providers who may all care for that same complex patient. And one complication that persists is that—for all the incentives to physicians to encourage patients to use alternate means of contact, other than the office visit, "there are many patients who still want that visit, and so we can't deemphasize [the office visit] too much.

"And ultimately there is a fear that it becomes a total salary," Musa says, "A salary gives you some comfort, but I think administratively we really worry about taking away people's work ethic, too. So there's a tough balance there."

Reprint HLR0413-10


This article appears in the April 2013 issue of HealthLeaders magazine.

Jim Molpus is the director of the HealthLeaders Exchange.

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