“For primary care practices, participating in a medical home demonstration requires substantial investments,” said Grand Martsolf, RAND policy researcher and the study’s lead author. “These costs of transformation include both one-time startup costs and ongoing, every-year costs.

High-functioning IT systems are crucial to converting a physician practice to a patient-centered medical home model, but only a third of practices examined in a new RAND Corporation study were able manage continuous investments in the necessary technology infrastructure.

“While there are financial incentives available to practices that make the shift, such investments might be especially challenging for small practices and those not associated with a larger health network, since they had higher transformation costs per clinician,” he added.

Patient-centered medical homes are primary care practices that invest in patient-centric structural capabilities such as patient registries, electronic health records, health information exchange tools and analytics software. Transitioning into this care model is designed to improve care quality and efficiency, but the costs often make the transition a challenge for small or independent practices.

“Our findings provide one of the best insights to date about the costs associated with medical home transformation,” said Martsolf. “These findings should help guide policymakers as they look for ways to encourage more medical practices to make this transition.”