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Logo of nihpaAbout Author manuscriptsSubmit a manuscriptHHS Public Access; Author Manuscript; Accepted for publication in peer reviewed journal;
N Engl J Med. Author manuscript; available in PMC 2009 August 19.
Published in final edited form as:
PMCID: PMC2729192

Building a Medical Neighborhood for the Medical Home

Elliott S. Fisher, M.D., M.P.H.

Recent efforts to improve primary care in the United States have focused largely on the development and implementation of practice models and payment reforms intended to create a “medical home” for patients. The notion of a medical home makes intuitive sense and indeed has great promise. But unrealistic expectations about this approach abound, and insufficient attention is being paid to several important barriers to the clinical and financial success of the medical-home model.

The concept of a medical home first emerged in pediatrics, where it was recognized that children with special needs would benefit from a delivery model that effectively coordinated the complex clinical and social services that many patients require. More recently, organizations representing the major primary care specialties — the American Academy of Family Practice, the American Academy of Pediatrics, the American Osteopathic Association, and the American College of Physicians — have worked together to develop and endorse the concept of the “patient-centered medical home,” a practice model that would more effectively support the core functions of primary care and the management of chronic disease.1 The coalition also argued for payment reforms that would provide support for services that tend to be inadequately reimbursed in current fee-for-service practice, such as care coordination outside the context of a specific office visit, the adoption of health information technology, and interaction with patients by telephone or e-mail. The payment reforms currently being tested generally involve an additional per-patient monthly payment to practices that meet the qualification requirements developed under the auspices of the National Committee on Quality Assurance (see Table 1). Although one recently announced demonstration program focuses on practices in a single integrated delivery system,2 most current or planned projects simply select qualified practices in a region or state.

Table 1
Eligibility Criteria for Participation in Medical-Home Programs.*

Expectations are high. States, health plans, and the Medicare program are making substantial financial bets that implementation of the medical home will lead not only to improved care but also to long-term savings, largely by reducing the number of avoidable emergency room visits and hospitalizations for patients with serious chronic illness. Some see the medical-home model as a means of reversing the decline in interest in primary care among medical students and residents, and others argue that broad implementation would reduce health care spending overall.3

But there are several barriers that require attention if the medical home is to live up to its promise. First, effective care coordination for patients with either acute or chronic conditions requires not only full access to all the necessary clinical information obtained at multiple sites (physicians’ offices, laboratories, hospitals, and nursing homes) but also a willingness by all the physicians involved in a patient’s care to participate in collaborative decision making. The current medical-home model rewards practices for establishing electronic health records, regardless of how well they are integrated with other providers’ systems, and leaves coordination entirely up to the primary care physician. There are no incentives for other physicians or hospitals to share information, improve coordination, or support shared decision making for patients who are in the medical home.

Second, it is still unclear how the public and other providers will respond to the model. Early reports from focus groups suggest that the term “medical home” makes many consumers think of nursing homes, with all the unfortunate connotations. Although the approach may be most likely to succeed when patients are required to choose a medical home, the public’s enthusiasm for gatekeepers was sorely tested in the 1990s. Whether other physician groups support the strategy will depend on how it is implemented. To the extent that Medicare or other payers strive to keep the overall pool of physician-payment funds constant, any increase in total payments to primary care physicians would have to come at the expense of payments to other physicians — surely a nonstarter.

Finally, it is far from clear how spending more on medical homes will lead to lower overall spending. Most of us believe that improved care coordination and more effective disease management will result in better quality and lower utilization rates among patients in medical homes. But whether these savings will more than offset the increased payment to those medical homes is doubtful. Moreover, several countervailing forces may limit the effect of the medical home on spending. In current medical-home models, primary care physicians have no real leverage to persuade specialists to change their practices in keeping with the goals of the program. To the extent that the income of other providers continues to depend on service volume, it is unlikely that either specialists or hospitals will respond to fewer visits and stays from medical-home patients by allowing their incomes to fall. Given the discretionary nature of most clinical decisions — for instance, choices about how frequently to see patients with chronic illnesses or to order diagnostic tests — the response of these providers will probably be to increase the volume (or intensity) of the services they provide to other patients to maintain their current incomes. The gains in quality may be valuable in their own right, but advocates need to recognize the underlying determinants of health care spending.

These barriers all point to the importance of context: patients and other health care providers have key roles to play in the success of the model. Success will be more likely if primary care reforms such as the medical-home model are aligned with reform strategies that foster shared accountability among all providers for measurably and transparently improving the quality of care and reducing its cost.4 Several approaches to overcoming these barriers should be considered (see Table 2).

Table 2
Strengthening Medical-Home Models.

The first is to make sure that steps toward implementation of medical-home models are aligned with the more general long-term goals of effective communication and care coordination among all providers. Most physicians already practice in coherent and stable local referral networks.5 Continued (or increased) payments to the medical home could be based on stepwise progress toward shared electronic health records and communication standards in an explicitly delineated local practice network.

Second, performance measures should be broadened to include comprehensive evaluations of patients’ experiences with care (including the effectiveness of care coordination), routine assessment of functional outcomes (that is, whether patients’ health and quality of life are actually improved as a result of care), and the total costs for all patients in these defined networks. Advances in measurement have made the adoption of reliable performance measures in these domains feasible; transparency would not only be reassuring to the public but would also augment the effectiveness of professional norms, giving primary care physicians, specialists, and hospitals an incentive to collaborate effectively to improve the coordination of care and mend the current fragmentation of the delivery system.

The third step would be to explore ways of integrating medical-home payments with other approaches to payment reform that foster shared accountability and shared rewards among all providers across the continuum of care. Medicare’s Physician Group Practice demonstration, for example, offers each participating group of physicians (and its affiliated hospitals) a share of any savings achieved from providing better and more cost-efficient care to the Medicare beneficiaries who receive the preponderance of their care from that group. Such an approach would provide an incentive for all providers in the group to work together to improve coordination and reduce costs. And the opportunity for shared savings could allow physicians’ net incomes to be preserved even while their total billings declined.

The medical home has great potential to improve the provision of primary care and the financial stability of primary care practice. What has been missing so far has been an effort to implement this model in concert with other reforms that more effectively align the interests of all physicians and hospitals toward the improvement of patient care. To deliver on its promise, the medical home needs a hospitable and high-performing medical neighborhood.


No potential conflict of interest relevant to this article was reported.


1. Joint principles of a patient-centered medical home released by organizations representing more than 300,000 physicians. Philadelphia: American College of Physicians; 2007. [Accessed September 2, 2008]. at
2. CIGNA and Dartmouth-Hitchcock launch ‘patient-centered medical home’ program to provide better care coordination. Bloomfield, CT: CIGNA; June 102008. [Accessed September 2, 2008]. at
3. Keckley PH, Underwood HR. The medical home: disruptive innovation for a new primary care model. Washington, DC: Deloitte Center for Health Solutions; 2008.
4. Shortell SM, Casalino LP. Health care reform requires accountable care systems. JAMA. 2008;300:95–7. [PubMed]
5. Fisher ES, Staiger DO, Bynum JP, Gottlieb DJ. Creating accountable care organizations: the extended hospital medical staff. Health Aff (Millwood) 2007;26:w44–w57. [PMC free article] [PubMed]