Unbiased Analysis of Today's Healthcare Issues

Physicians: Coming to a Home Near You

Written By: Jason Shafrin - Nov• 18•11

In the 18th and early 19th centuries, physician home visits in the U.S. were very common.  In fact, the home was the primary place where medicine was practiced.  Because physician wages at this time were comparable to those of the average laborer, a market which forced physicians to internalize the time and transportation costs to visit physicians made sense.

As physician wages have grown over time, however, the home visit has made less economic sense.  Consider the table below.  Primary care physician median wages are five times as high as the typical earners wages.  If it takes 30 minutes for the physician to drive and set up his equipment for a home visit, the incremental cost for the typical physician visit would be about $40 compared to only a time cost of about $8 if the patient visited the doctor. Having physician assistants or nurses make a home visit would be relatively more economical, but still is not economically efficient given the current labor market.

Nevertheless, home visits may be making a comeback.

A number of physicians in Great Britain’s National Health Service already make home visits. Further, Health Reform (specifically Section 3024 of the Affordable Care Act) mandated the creation of the Independence at Home (IAH) Demonstration. The IAH demonstration will begin in January 2012. Do home visits make economic sense?

According to the Medicare website, the IAH “…utilizes physician and nurse practitioner directed primary care teams to provide services to certain Medicare beneficiaries in their homes. Participating practices will be accountable for providing comprehensive, coordinated, continuous, and accessible care to high-need populations at home and coordinate health care across all treatment settings.”

The Demonstration sites will be required to:

  • Have experience providing home-based primary care to applicable beneficiaries
  • Make in-home visits
  • Available 24 hours per day, 7 days a week
  • Furnishes care to at least 200 applicable beneficiaries
  • Uses electronic health information systems

Certainly the IAH increases the cost of physician visits. The IAH, however, could be economically efficient if it reduces the likelihood sick patients require hospital or nursing home care. Although in most cases it is more efficient for the patient to visit the physician, in some cases when the patient is very ill, the cost to patient to travel to the physician’s office should not be their hourly wage. If they are in serious pain, the would be willing to pay much more than the difference between their hourly wage and the physician’s hourly wage to have the physician visit them in their home.

If this is not an economical option, patient may simply forgo preventive care or regular check-ups. Failing to make these periodic visits to the physician could allow diseases to fester untreated and thus result in unnecessary hospitalizations.

Thus, the IAH demonstration will certainly improve convenience for patients, but will only be cost-effective if it can reduce the likelihood patient’s require hospitalization or long-term care.

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