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Journal Article


A Health Plan Spurs Transformation of Primary Care Practices into Better-Paid Medical Homes

The Issue

Primary care physicians earn less than specialty care physicians, which contributes to the nation's shortage of primary care physicians. Increasing salaries for primary care physicians may be one way to reverse the trend, but paying higher salaries requires health systems to generate cost savings through greater efficiency and quality of care.

The Innovation

Capital District Physicians' Health Plan, a nonprofit health plan in upstate New York, began using a risk-adjusted capitation model to enable primary care practices to create patient-centered medical homes. With help from TransforMED, a nonprofit organization that helps primary care practices assess and improve care processes, several health plan practices redefined staff roles and added care managers to improve care coordination and patient outcomes. To encourage participation, the health plan offered physicians a $35,000 supplement. Physicians were also eligible for a $50,000 bonus if they met quality and cost targets.


The rate of cost growth among the pilot practices with medical homes fell to 67 percent that of control practices in the network. The practices also demonstrated improvement on many Healthcare Effectiveness Data and Information Set (HEDIS) measures, including use of antibiotics and performance of diabetic eye exams, and reported increased job satisfaction among staff. Providers' salaries were enhanced by $45,000 to $65,000 in 2009.

Publication Details



J. L. Feder, "A Health Plan Spurs Transformation of Primary Care Practices into Better-Paid Medical Homes," Health Affairs, March 2011 30(3):397–99.