Have you read the study with the weighty title of “Fully Capitated Payment Breakeven Rate for a Mid-Size Pediatric Practice?” (Pediatrics. 2016, July 29. doi: 10.1542/peds.2015-4367 ). You should! Of course, it’s easy for me to admonish you because my active practice days are behind me, and I have the time to read things with intimidating titles. But if you have had the time it takes to read the handwriting on the wall, you know that fee for service (FFS) is on the endangered list and is being replaced by a variety of other payment models, many of which are based on some form of capitation. Even just a cursory reading of this study from the Center of Healthcare Innovation and Policy Research at George Washington University should help you appreciate the complexities implicit in the transition from FFS to capitation and give you a sense of how it might affect the way you practice.
To amass the data they needed to run their computer models, the investigators had to make some assumptions. Here are just a few: The average pediatrician salary was pegged at $180,000, and she/he would be seeing 25 patients per day for 220 clinical days in the year. The practice she/he is working in has a staff to physician ratio of 3.2. Do you even know what your practice’s staff to physician ratio is? Is it ever discussed? How do their assumptions square with your reality?
The researchers also assumed that when practices transition to a capitated system many of them also adopt a primary care medical home (PCMH) model that often includes changes in staffing ratios almost always resulting in a higher staff to physician ratio. When the researchers fed their model even modest increases in staff to physician ratio from 3.2 to 4.0 or 4.4, the result was an increase in the break-even payment rate of between 12% and 23%. However, this study doesn’t answer whether related changes in panel size and patient outcome would make these increases sustainable.
It also doesn’t include the complexities that are inherent in the trend toward part-time employment. How good is your practice at optimizing physician to staff ratios when several physicians have chosen to work part-time? Are the physicians’ schedules arranged to minimize resource-wasting overlap in staffing? How efficient are you at utilizing support staff? For example, do you do your own measurements as part of your exam and give immunizations? How does this compare with your peers? Is your efficiency paying for some of their overhead?
If you are already using a PCMH model, how efficient have you been in using the additional support staff that it requires? Measuring the improvement in quality the change has created is difficult, but it should be fairly easy to determine the cost of the added staffing.
The investigators acknowledge that they have not included the cost of immunization in their models, and I don’t think that they expect to us take their numbers too seriously. But the first line in the authors’ conclusion is the reason that you should take the time to read this study. “Practices are more likely to succeed in capitated models if pediatricians understand how these models alter practice finances.”
You may have gone into pediatrics because of the noble causes that the specialty espouses. But it’s time to swallow hard and acknowledge that this is one of those situations in which it is all about the money. You need to keep informed.
Dr. Wilkoff practiced primary care pediatrics in Brunswick, Maine, for nearly 40 years. He has authored several books on behavioral pediatrics including “How to Say No to Your Toddler.” Email him at pdnews@frontlinemedcom.com.
