EFFECT OF COMPENSATION METHOD ON THE BEHAVIOR OF PRIMARY-CARE PHYSICIANS IN MANAGED CARE ORGANIZATIONS - EVIDENCE FROM INTERVIEWS WITH PHYSICIANS AND MEDICAL LEADERS IN WASHINGTON-STATE

The perceived relationship between primary care physician compensation and utilization of medical services in medical groups affiliated with one or more among six managed care organizations in the state of Wash ington was examined. Representatives from 67 medical group practices c ompleted a survey designed to determine the organizational arrangement s and norms that influence primary care practice and to provide inform ation on how groups translate the payments they receive from health pl ans into individual physician compensation, Semistructured interviews; with 72 individual key informants from 31 of the 67 groups were condu cted to ascertain how compensation method affects physician practice. A team of raters read the transcripts and identified key themes that e merged from the interviews. The themes generated from the key informan t interviews fell into three broad categories. The first was self-sele ction and satisfaction. Compensation method was a key factor for physi cians in deciding where to practice. Physicians' satisfaction with com pensation method was high in part because they chose compensation meth ods that fit with their practice styles and lifestyles. Second, compen sation drives production. Physician production, particularly the numbe r of patients seen, was believed to be strongly influenced by compensa tion method, whereas utilization of ancillary services, patient outcom es, and satisfaction are seen as much less likely to be influenced, Th e third theme involved future changes in compensation methods. Medical leaders, administrators, and primary care physicians in several group s indicated that they expected changes in the current compensation met hods in the near future in the direction of incentive-based methods. T he responses revealed in interviews with physicians and administrative leaders underscored the critical role compensation arrangements play in driving physician satisfaction and behavior.