The impact of managed care on the physician marketplace

To examine the impact of managed care on the employment and compensation of primary care and specialty physicians, as measured by changes in income, physician-to-population ratios, and specialty choices.

The authors used data from the American Medical Association's Socioeconomic Monitoring System survey, a nationally representative 1% random survey of post-residency patient-care physicians, and location data from the AMA Masterfile to evaluate the relationship between the growth in managed care from 1985 to 1993 and (a) inflation-adjusted physician incomes and (b) physician-to-population ratios for primary care physicians and specialists. They also used data from the National Residency Matching Program for 1989 through 1995 to look at trends in available positions and specialty choices.

Primary care incomes grew 4.78% annually ($33,526 cumulatively) in states with the highest managed care growth, compared to 1.20% ($7448 cumulatively) in the lowest quartile of managed care growth. The difference in income growth for medical and surgical subspecialists between the highest and lowest quartiles was not statistically significant. The incomes of radiologists, anesthesiologists, and pathologists (RAPs) rose 0.14%, or $1700, in the highest quartile versus 4.14% ($58,558) in the lowest. Subspecialists per capita did not differ by quartile of managed care growth; but RAPs per capita increased fastest in states in the lowest quartile. Between 1989 and 1995, the number of family practice and pediatric residency positions that were filled rose 32%, while the number filled remained stable for medical and surgical subspecialists and the number of RAP positions filled fell 14%.

The growth in managed care has been associated with significant changes in physician incomes and practice locations. Between 1985 and 1993, states with the fastest growth in managed care penetration saw the highest rate of growth in primary care physicians' income and the slowest rate of growth in RAP physicians' income. At the same time, the number of RAP physicians grew most rapidly in those states with the lowest rate of managed care growth. Finally, between 1989 and 1995, there was a dramatic increase in the number of primary care residency positions filled and a marked decrease in the number of RAP residency positions filled across the country.