Physicians were once independent practitioners who intermediated between their patients and medical businesses such as hospitals and laboratories. Now these businesses use financial incentives to manipulate patient care to benefit a third party. Managed care plans are systematic offenders. They may offer physicians a cash bonus for reducing hospitalizations or referral to specialists. The most insidious strategy is to require the physician to accept a total capitation payment.
Total capitation shifts the risk of insurance to individual physicians.
The physician or clinic group is allocated a fixed amount for the patient care. Services that the physician cannot perform must be paid for out of this allocation. This is a powerful incentive for the physician to not order tests or consult with other physicians about the patient's care. Many hospitals offer physicians incentives to hospitalize insured patients and to not hospitalize indigent patients. These may be positive incentives, ranging from subsidized office space to non-recourse loans, or negative incentives.