THE EFFECT OF PHYSICIAN PRACTICE ORGANIZATION ON EFFICIENT UTILIZATION OF HOSPITAL RESOURCES

Objective. This study examines variations in the efficient use of hosp ital resources across individual physicians. Data Sources and Setting. The study is conducted over a two-year period (1989-1990) in all shor t-term general hospitals with 50 or more beds in Arizona. We examine h ospital discharge data for 43,625 women undergoing cesarean sections a nd vaginal deliveries without complications. These data include physic ian identifiers that permit us to link patient information with inform ation on physicians provided by the state medical association. Study D esign. The study first measures the contribution of physician characte ristics to the explanatory power of regression models that predict res ource use. It then tests hypothesized effects on resource utilization exerted by two sets of physician level factors: physician background a nd physician practice organization. The latter includes effects of hos pital practice volume, concentration of hospital practice, percent man aged care patients in one's hospital practice, and diversity of patien ts treated. Efficiency (inefficiency) is measured as the degree of var iation in patient charges and length of stay below (above) the average of treating all patients with the same condition in the same hospital in the same year with the same severity of illness, controlling for d ischarge status and the presence of complications. Principal Findings. After controlling for patient factors, physician characteristics expl ain a significant amount of the variability in hospital charges and le ngth of stay in the two maternity conditions. Results also support hyp otheses that efficiency is influenced by practice organization factors such as patient volume and managed care load. Physicians with larger practices and a higher share of managed care patients appear to be mor e efficient. Conclusions. The results suggest that health care reform efforts to develop physician-hospital networks and managed competition may promote greater parsimony in physicians' practice behavior.