By Paul L. Hebert, Chuan-Fen Liu, Edwin S. Wong, Susan E. Hernandez, Adam Batten, Sophie Lo, Jaclyn M. Lemon, Douglas A. Conrad, David Grembowski, Karin Nelson, and Stephan D. Fihn Patient-Centered Medical Home Initiative Produced Modest Economic Results For Veterans Health Administration, 2010–12 ABSTRACT 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. T he Veterans Health Administration (VHA) invested nearly $2 billion during fiscal years 2010–12 in its effort to transform how it delivers health care. 1 This effort had several components, but its centerpiece—and the com- ponent that is the most well developed—is the Patient Aligned Care Teams (PACT) initiative. The goal of the initiative is to transform primary care in a manner consistent with the patient- centered medical home model. 2 PACT began in April 2010 and is by far the most extensive implementation of that model to date in either the government or the private sector. 3–5 PACT involved all VHA outpatient primary care clinics—including all major medical centers and small community-based clinics—which collec- tively treat over five million primary care pa- tients annually. We evaluated the associations between the implementation of PACT and trends in health care use and costs between April 2010 and September 2012.We used the resulting data to estimate the return on investment in PACT. Study Data And Methods The PACT Initiative Consistent with the patient- centered medical home model, the goals of PACT are to provide primary care that is more compre- hensive, longitudinal, and patient centered. 2 The initiative has several interdependent compo- nents: the establishment of team-based care, in- creased access to same-day care, improved care management and coordination, and increased focus on patient-centered care. Primary care providers at the VHA include physicians and nurse practitioners. Before the implementation of PACT, primary care providers worked in large groups that shared nurses and other staff members. Under PACT, each primary care provider became the leader of a team that also includes a registered nurse care manager, a doi: 10.1377/hlthaff.2013.0893 HEALTH AFFAIRS 33, NO. 6 (2014): 980–987 ©2014 Project HOPE— The People-to-People Health Foundation, Inc. Paul L. Hebert (paul.hebert2@ va.gov) is an investigator in the Veterans Affairs (VA) Health Services Research and Development Center for Veteran-Centered, Value- Driven Health, VA Puget Sound Health Care System, and a research associate professor in the Department of Health Services, School of Public Health, University of Washington, both in Seattle. Chuan-Fen Liu is an investigator in the VA Health Services Research and Development Center for Veteran-Centered, Value- Driven Health and a research professor in the Department of Health Services, School of Public Health, University of Washington. Edwin S. Wong is an investigator in the VA Health Services Research and Development Center for Veteran-Centered, Value- Driven Health. Susan E. Hernandez is a doctoral candidate in the Department of Health Services, School of Public Health, University of Washington. Adam Batten is a statistician in the VA Health Services Research and Development Center for Veteran-Centered, Value-Driven Health. Sophie Lo is a program analyst in the Veterans Health Administration Office of Analytics and Business Intelligence, in Bedford, Massachusetts. 980 Health Affairs June 2014 33:6 ACOs & Medical Homes Downloaded from HealthAffairs.org on May 31, 2020. Copyright Project HOPE—The People-to-People Health Foundation, Inc. For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.