Estimating the cost of using non-physician providers in primary care teams in an HMO: where would the savings begin?

The economic effects attributable to employing non-physician providers (NPPs) in primary care in a large HMO were estimated by calculating the per member per month (PMPM) cost for primary care provider compensation as a function of panel size for an MD/NPP provider team. After establishing an adjusted baseline of 1352 patients for an MD working alone, we hypothetically hired an NPP for each MD and increased the average panel size from 1400 to 2800 patients in increments of 200 while reducing the number of teams to keep total enrollment constant. For panel increases of less than 650 patients the addition of an NPP to a team represented a net economic loss in terms of professional service costs. By expanding the panel size for an MD/NPP team by more than 650 patients we were able to predict a linear increase in savings. The model projects that panels of 2400 patients would result in savings of $1.38 per member per month, approximately $1.65 million dollars per 100,000 enrollees per year.