Perceived financial incentives, HMO market penetration, and physicians' practice styles and satisfaction

Objective. To estimate the effects of physicians' personal financial incent ives and other measures of involvement with HMOs on three measures of satis faction and practice style: overall practice satisfaction, the extent to wh ich prior expectations about professional autonomy and the ability to pract ice good-quality medicine are met, and several specific measures of practic e style. Data Sources. A telephone survey conducted in 1997 of 1,549 physicians who were located in the 75 largest Metropolitan Statistical Areas in 1991. Elig ible physicians were under age 52, had between 8 and 17 years of post-resid ency practice experience, and spent at least 20 hours per week in patient c are. The response rate was 74 percent. Study Design. Multivariate binomial and multinomial ordered logistic regres sion models were estimated. Independent variables included physicians' self -reported financial incentives, measured by the extent to which their overa ll financial arrangements created an incentive to either reduce or increase services to patients, the level of HMO penetration in the market, employme nt setting, medical specialty, exposure to managed care while in medical tr aining, and selected personal characteristics. Principal Findings. About 15 percent of survey respondents reported a moder ate or strong incentive to reduce services; 70 percent reported a neutral i ncentive; and 15 percent reported an incentive to increase services. Compar ed to physicians with a neutral incentive, physicians with an incentive to reduce services were from 1.5 to 3.5 times more likely to be very dissatisf ied with their practices and were 0.2 to 0.5 times as likely to report that their expectations regarding professional autonomy and ability to practice good-quality medicine were met. They were also 0.2 to 0.6 times as likely to report having the freedom to care for patients the way they would like a long several specific measures of practice style, such as sufficient time w ith patients, ability to hospitalize, ability to order tests and procedures , and ability to make referrals. These effects were generally reinforced by practicing in an area with a high level of HMO penetration and were offset to some extent by having had exposure to HMOs and the practice of cost-eff ective medicine while in medical training. Conclusions. Although financial incentives to reduce services are not wides pread, there is a legitimate reason to be concerned about possible adverse affects on the quality of care. More research is needed to investigate dire ctly whether changes in patients' health are affected by their physicians' financial incentives.