Financial incentives and physician practice management: Do capitation contracts affect patient care patterns

Under the guise of bringing the spiraling costs of medical care under control, "managed care" has rapidly acquired a dominant position within the health insurance industry. Has the economics of managed care influenced the delivery of medical care? In particular, has managed care altered the traditional physician-patient relationship by offering physicians financial incentives to provide "cost-conscious" medical care to patients?;Data were extracted from 1,231 hospital bills covering Medicare patients admitted to the same general hospital for common, non-surgical illnesses during a 13-month period. The number of laboratory tests and the total charges for laboratory tests was statistically compared between the patient populations treated by the two physician groups.;The results demonstrated that physicians who participate in capitation contracts requested fewer laboratory tests and expended fewer laboratory dollars than did traditional fee-for-service physicians. How these findings could prove useful to hospital administrators was discussed.;Analyses of associated demographic data raised serious questions about selective enrollment of younger and healthier Medicare participants by HMO/PPO Medicare-replacement insurers, so called "cherrypicking." When compared to traditional Medicare patients, HMO/PPO Medicare-replacement patients consumed fewer laboratory resources, and experienced shorter lengths of hospital stay.;To investigate this issue, a study was designed to compare, the treatment patterns practiced by physicians who have managed-care capitation contracts with similar treatment patterns practiced by traditional fee-for-service physicians. The study focuses upon utilization of Clinical Laboratory services requested by the two physician groups in treating hospitalized Medicare patients.;The overwhelming conclusion from the study was that managed care has definitely altered the traditional delivery of medical care in hospitalized patients. As to whether or not this is beneficial to patients, the discussion concludes by raising a number of disturbing unanswered questions.