Cost, Use Of Health Services Is Not Affected By Physician Compensation: A StudyOf Washington State Medical Groups/Managed Care Organizations

Whether by productivity or by salary, the way in which primary care physicians are compensated in medical groups does not appear to affect the cost or amount of health services for patients. A study by researchers at the University of Washington School of Public Health and Community Medicine and published in the March 18 edition of the Journal of the American Medical Association, is one of the first quantitative studies to examine methods of physician compensation in medical groups to determine whether such financial incentives influence the individual physician's behavior.

"We were surprised to find no significant differences between compensation types," said Dr. Douglas Conrad, UW professor of health services and lead author of the study. "It's been thought that paying individual primary health-care physicians on a fee-for-service basis would drive up the amount and costs of medical services for patients, but at the physician-patient level, this doesn't appear to be true."

For the study, researchers examined 60 medical groups in Washington state to identify 865 primary care (internal medicine, family practice or general practice) physicians and 200,931 adult enrollees. Each physician was associated with one or more of three managed health care plans, which provided individual enrollee data for the study. Some of the medical groups compensated physicians on a fee-for-service basis, while others did so on a salaried basis. Through a survey of 1994 plan enrollment and utilization data, researchers identified the methods and amount of physician compensation for services. In addition, they measured the yearly physician visits, hospital days and total estimated health costs for each patient during that time period. Results found no significant difference related to physician payment and patient costs and utilization.

"This study penetrated to the level of how the medical group compensated the

Contact: Julie Rathbun
(206) 543-3620
University of Washington

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