Patient-Centered Medical Home Initiative Produced Modest Economic Results For Veterans Health Administration, 2010-12

In 2010 the Veterans Health Administration (VHA) began a nationwide initiative called Patient Aligned Care Teams (PACT) that reorganized care at all VHA primary care clinics in accordance with the patient-centered medical home model. We analyzed data for fiscal years 2003-12 to assess how trends in health care use and costs changed after the implementation of PACT. We found that PACT was associated with modest increases in primary care visits and with modest decreases in both hospitalizations for ambulatory care-sensitive conditions and outpatient visits with mental health specialists. We estimated that these changes avoided $596 million in costs, compared to the investment in PACT of $774 million, for a potential net loss of $178 million in the study period. Although PACT has not generated a positive return, it is still maturing, and trends in costs and use are favorable. Adopting patient-centered care does not appear to have been a major financial risk for the VHA.