Cost Reduction

NPs, PAs could reduce the costs of caring for complex patients

August 9, 2019 10:01 pm
  • The role of nurse practitioners (NPs) and physician assistants (PAs) varies significantly by organization.
  • A recent study found the total costs of caring for complex patients was $2,000 lower when NPs and PAs provided the care, compared with physicians.
  • Research has shown that outcomes are similar among patients treated by NPs, PAs and physicians.
  • Leaders should consider using NPs and PAs as primary care providers in their organizations to reduce utilization and contain costs — and perhaps even improve retention.

In this interview, Perri Morgan, a professor and researcher at Duke University School of Medicine, helps debunk the myth that nurse practioners (NPs) and physician assistants (PAs) raise the cost of caring for complex patients.

On the impetus for the research. While NPs and PAs are less expensive to hire than physicians, some healthcare leaders believe these advanced practice providers could drive up non-salary costs, particularly care costs. For example, some assume that because NPs and PAs have less training than physicians, they may have less confidence in their diagnostic skills, which could potentially drive up costs for lab or imaging tests, Morgan says. Another belief is that NPs and PAs refer patients to specialists more frequently than physicians do.

Because little current evidence supports these notions, Morgan, who is a PA, along with a research team that included a physician and an NP, wanted to study differences in utilization and costs between physicians and advanced practice providers treating complex patients with diabetes.

On the challenge of studying differences in utilization by provider type. Morgan says one barrier to studying care by NPs and PAs is that they are used so differently across settings, even in the same health system. “One clinic might use a PA or NP as a primary care provider, while other clinics might only use them for same-day visits or to manage uncomplicated chronic diseases,” she says.

By analyzing two years of data from the Department of Veterans Affairs (VA), however, Morgan and her team were able to circumvent that obstacle. As part of its medical home model, the VA uses patient-aligned care teams (PACTs) led by a primary care provider, either a physician, NP or PA. Other members of the team include a registered nurse, a licensed practice nurse or medical assistant, and a clerical assistant. In each PACT, physicians, NPs and PAs fill the same role, allowing for a better comparison of utilization and costs.

On their findings. Morgan’s team found that case-adjusted total care costs were 6% to 7% lower for NP and PA patients than for physician patients. Specifically, annual costs for NP patients were $2,005 lower, while costs for PA patients were $2,300 lower, compared with physician patients. Their findings were published in the June 2019 issue of Health Affairs.

“The lower costs in our study were driven primarily by a higher rate of hospitalization among physician patients,” Morgan says. Higher emergency department (ED) visits among physician patients, compared with NP and PA patients, also was a factor. Annual pharmacy costs were also about $300 higher for physician patients.

The study adds to a growing body of research, including a study by Salim S. Virani in Population Health Management, linking NPs and PAs to lower utilization, compared with physicians. In addition, analysis of Medicare data by Jennifer Perloff and colleagues in Health Services Research found patients managed by NPs had a lower cost of care than those managed by physicians.

On possible explanations. Although the VA data did not allow Morgan and her team to compare patient panel size among teams, Virani’s research found that physicians in the VA have panel sizes about 15% larger than those of PAs and NPs. “This might mean that PAs and NPs have more time to work with each patient,” Morgan says, suggesting that additional time with patients could have a positive impact on utilization and costs.

Beyond panel size, Morgan believes other factors could explain the difference in utilization and costs. “Although this is speculation at this point, my leading theory is that it might be easier for patients to reach their PA than it is to reach their physician,” she says. For example, a heart failure patient who is short of breath might be able to get a faster callback from a PA
or NP than a physician and avoid a visit to the ED.

Another possible explanation for the differences in cost and utilization might be that NPs and PAs in the VA are better at mobilizing the PACT than physicians, Morgan says. “It would be easy to imagine that nurse practitioners — almost all of whom were registered nurses before they became NPs — are really good at working with RNs and using RNs to the top of their abilities,” she says.

Morgan says better relationships between patients and NPs and PAs also could explain the differences in utilization. She points to some studies showing higher patient satisfaction among the patients of NPs and PAs, which could translate to lower
utilization and costs compared with physicians’ patients.

On how different provider types affect clinical outcomes. Morgan says a large body of research has found no differences in outcomes between patients treated by physicians and those treated by PAs or NPs. A 2018 study by George Jackson, Morgan and others published in the Annals of Family Medicine found no differences in intermediate diabetes outcomes — specifically HbA1c values, low-density cholesterol and blood pressure — among the same cohort of patients who received their care from PAs, NPs or physicians for two years. Systematic reviews have uncovered similar findings on clinical outcomes, Morgan says.

On payer payment of NP and PA services. While most payers cover medical and surgical services provided by advanced practice providers, they do not always pay the same rate that they pay physicians. Medicare pays PAs and NPs 85% of what it pays physicians for the same care. Among commercial plans, payment terms vary.

Takeaways for finance leaders. “Our paper shows that if leaders want to use PAs and NPs at the top of their license as primary care providers, they should expect quality to be maintained and costs to be similar or maybe even better,” Morgan says. “We found no evidence to support the idea that PAs and NPs will not save money because they will order more tests and make more referrals.” Morgan also notes that the lower salaries of NPs and PAs, compared with physicians, were not figured into her team’s analysis, suggesting that the savings could be even larger if labor costs are considered.

The findings also suggest that it is reasonable for leaders to hire PAs and NPs to serve as primary care providers managing their own panels, Morgan says. “Most of the time, states’ scope of practice is not what limits PAs and NPs,” she says. “Organizational restrictions are often more restrictive than states’ scope of practice.”

If finance leaders work in organizations where advanced practice providers do not care for complex patients, they may want to work with clinical leaders to change their policies. In some cases, they may have to collaborate with department leaders, as policies may vary by department.

Besides potentially saving costs, Morgan believes there is another advantage to using PAs and NPs at the top of their license: retention. “Turnover is expensive, and the market for PAs and NPs is very hot,” she says. PAs and NPs who are relegated to handling same-day visits are likely to get bored and move on to better opportunities.

Regarding retention, Morgan offers another piece of advice: “It is becoming clearer that careful onboarding of new PAs and NPs, especially if they are new graduates, is important,” she says. As part of her research, she is also studying how comprehensive onboarding programs might affect PA and NP retention and performance.

On the study’s relevance to population health management. As value-based payment becomes a reality and more health systems move toward population health management models similar to the VA’s, Morgan believes her study’s findings are especially relevant. “The longstanding questions have been: Should we use PAs and NPs as primary care providers, or should we just use them for a segment of care like same-day visits? And should PAs and NPs only see less complex patients, or  can they see complex patients as well?” she says. “Our study looked at the primary care provider role for complex patients and found no difference in quality and better costs.” 

Interviewed for this article:

Perri Morgan, PhD, PA-C, is a professor in the Department of Family Medicine and Community Health, Physician Assistant Program, and Department of Population Health Sciences at Duke University School of Medicine, Durham, N.C.


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