Use of Midlevel Practitioners to Achieve Labor Cost Savings in the Primary Care Practice of an MCO

OBJECTIVE: To estimate the savings in labor costs per primary care visit that might be realized from increased use of physician assistants (PAs) and nurse practitioners (NPs) in the primary care practices of a managed care organization (MCO). STUDY SETTING/DATA SOURCES: Twenty-six capitated primary care practices of a group model MCO. Data on approximately two million visits provided by 206 practitioners were extracted from computerized visit records for 1997-2000. Computerized payroll ledgers were the source of annual labor costs per practice from 1997-2000. STUDY DESIGN: Likelihood of a visit attended by a PA/NP versus MD was modeled using logistic regression, with practice fixed effects, by department (adult medicine, pediatrics) and year. Parameter estimates and practice fixed effects from these regressions were used to predict the proportion of PA/NP visits per practice per year given a standard case mix. Least squares regressions, with practice fixed effects, were used to estimate the association of this standardized predicted proportion of PA/NP visits with average annual practitioner and total labor costs per visit, controlling for other practice characteristics. RESULTS: On average, PAs/NPs attended one in three adult medicine visits and one in five pediatric medicine visits. Likelihood of a PA/NP visit was significantly higher than average among patients presenting with minor acute illness (e.g., acute pharyngitis). In adult medicine, likelihood of a PA/NP visit was lower than average among older patients. Practitioner labor costs per visit and total labor costs per visit were lower (p<.01 and p=.08, respectively) among practices with greater use of PAs/NPs, standardized for case mix. CONCLUSIONS: Primary care practices that used more PAs/NPs in care delivery realized lower practitioner labor costs per visit than practices that used less. Future research should investigate the cost savings and cost-effectiveness potential of delivery designs that change staffing mix and division of labor among clinical disciplines.