Related Experiment Videos
Trust me: technical and institutional determinants of health maintenance organizations shifting risk to physicians
S Sleeper1, D R Wholey, R Hamer
1Department of Social and Decision Sciences, Carnegie Mellon University, Pittsburgh, PA 15213-3890, USA. ssaz+@andrew.cmu.edu
Insights
Health Maintenance Organizations (HMOs) shift financial risk to physicians using capitation. Group HMOs and larger IPA HMOs are more likely to adopt this model, influenced by legitimacy signals.
Area of Science:
- Health Economics
- Healthcare Management
- Medical Policy
Background:
- Health Maintenance Organizations (HMOs) utilize various financial arrangements to manage healthcare costs.
- Capitation, a payment model where physicians receive a fixed amount per patient, represents a significant form of risk-shifting from insurers to providers.
- Understanding the determinants of this risk-shifting is crucial for healthcare policy and provider network management.
Purpose of the Study:
- To identify the key factors influencing Health Maintenance Organizations (HMOs) in shifting financial risk to physicians via capitation.
- To differentiate risk-shifting propensities between Multispecialty-Medical-Group (Group) HMOs and Independent Physician Associations (IPA) HMOs.
- To explore the role of organizational characteristics and legitimacy signals in the adoption of capitation.
Main Methods:
- Comparative analysis of risk-shifting strategies between different types of HMOs (Group vs. IPA).
- Statistical examination of the relationship between physician enrollment size and risk-shifting within IPA-HMOs.
- Assessment of the impact of organizational structure (for-profit vs. non-profit) and federal qualification on risk-shifting behavior.
Main Results:
- Multispecialty-Medical-Group (Group) HMOs exhibit a higher likelihood of shifting risk compared to Independent Physician Associations (IPA) HMOs.
- In IPA-HMOs, a larger patient enrollment per physician is positively correlated with increased risk-shifting.
- For-profit HMOs are generally less inclined to shift risk, potentially due to consumer trust concerns, unless they possess federal qualification, a signal of legitimacy.
Conclusions:
- Organizational type and size are significant predictors of risk-shifting through capitation in HMOs.
- Legitimacy, as signaled by federal qualification, can mitigate negative perceptions and encourage risk-shifting even in for-profit entities.
- Findings highlight the complex interplay between financial incentives, organizational structure, and market perception in shaping healthcare payment models.
Abstract:
This paper examines the factors that influence a Health Maintenance Organization (HMO) to shift risk to doctors through an incentive arrangement called capitation, where physicians are paid a fixed amount per patient for a period of time for any and all medical services required by the patient. Multispecialty-medical-group (Group) HMOs are more likely to shift risk than Independent Physician Associations (IPA) HMOs. Within IPA HMOs, larger enrollment per physician is positively associated with more risk shifting. We find that institutional factors signaling legitimacy play an important role in determining risk shifting. For-profit HMOs are less likely to shift risk, which we interpret as reflecting consumer distrust of for-profit HMOs. However, for-profit HMOs that are federally qualified, which we interpret as a signal of legitimacy, are more likely to shift risk.