Primary Care Physician Compensation Method in Medical Groups

Abstract

IN TODAY'S health care environment, physicians, their patients, health care leaders, and public policymakers are confronting the challenges of managed care. Financial incentives and externally imposed utilization management constraints are being applied to medical practice with unprecedented intensity in a climate of increased competition and cost consciousness. Despite professional and public concern regarding the impact of these economic pressures on the quality and efficiency of health care, there have been few quantitative studies of the impact of managed care on the cost and utilization of health services.^1-3 There have been only 2 prior studies^2,3 on the impact of financial incentives for physicians on the general utilization and cost of health services, and both of those focused on plan payment method rather than compensation by the medical group to the individual physician. Moreover, a recent descriptive study of large medical groups in California⁴ suggested that placing medical groups at risk through health plan capitation might result in reduced utilization, but did not address individual physician compensation methods within those groups.