NEVERMIND! In Union County adoption of a DPC option cost the county money. So say actual actuaries. I’ll leave this post essentially intact, for the record (of my folly!)
Here’s some data that shows plausible overall cost reduction from direct primary care even after adjusting selection bias. It comes from the Paladina-operated clinic in Union County, North Carolina, the principal subject of two prior posts.
The county employees choose either a high-deductible HSA under which primary care is received on a fee for service basis or a plan under which they receive primary care at a direct primary care clinic. About 1000 persons were enrolled in each group. The county reported that for the plan year that ended in 2018, overall costs to the employer for the DPC group were 26% lower than those in the FFS group.
The county also reported relative medical risk scores for the the two groups, and these were distinctly different: 1.11 for the FFS group and 0.92 for the DPC group. Based on these risk factors, the DPC group could be expected to have total medical costs that were 17% lower than the FFS group.
The expected costs for the DPC based on these risk factors would 83% of those for the FFS group. Instead, the costs were 74% of the FFS group. When the difference of 9% is divided by the 83% base figure, it suggests that the beneficial effect of direct primary care was just under 11%. That’s well short of the 26% that appears in a first glance at the County’s report; reasonable risk adjustment makes a big difference.
Seemingly, however, direct primary care can make a significant difference as well.
Bear in mind that, however valid the 11% improvement may be, it will not necessarily hold up when extended from the the relatively healthy (“0.92”) group to a significantly less healthy (“1.11”) group. See this prior post.
See “NEVERMIND” above. Extending the reductions backward to the less healthy group is more complicated than I thought.