Effects of compensation methods and physician group structure on physicians' perceived incentives to alter services...

To examine how health plan payment, group ownership, compensation methods, and other practice management tools affect physician perceptions of whether their overall financial incentives tilt toward increasing or decreasing services to patients.

Nationally representative data on physicians are from the 2000-2001 Community Tracking Study Physician Survey (N=12,406).

Ordered and multinomial logistic regression were used to explore how physician, group, and market characteristics are associated with physician reports of whether overall financial incentives are to increase services, decrease services, or neither.

Seven percent of physicians report financial incentives are to reduce services to patients, whereas 23 percent report incentives to increase services. Reported incentives to reduce services were associated with reports of lower ability to provide quality care. Group revenue in the form of capitation was associated with incentives to reduce services whereas practice ownership and variable compensation and bonuses for employee physicians were mostly associated with incentives to increase services to patients. Full ownership of groups, productivity incentives, and perceived competitive markets for patients were associated with incentives to both increase and reduce services.

Practice ownership and the ways physicians are compensated affect their perceived incentives to increase or decrease services to patients. In the latter case, this adversely affects perceived quality of care and satisfaction, although incentives to increase services may also have adverse implications for quality, cost, and insurance coverage.