Physicians in Control of the Capitated Dollar: Do unto Others …
Authors: Stanley Goldfarb
Journal: Annals of Internal Medicine (1995)

Editorials1 October 1995Physicians in Control of the Capitated Dollar: Do unto Others …Stanley Goldfarb, MDStanley Goldfarb, MDFrom Graduate Health System Philadelphia, PA 19103.Search for more papers by this authorAuthor, Article, and Disclosure Informationhttps://doi.org/10.7326/0003-4819-123-7-199510010-00010 SectionsAboutVisual AbstractPDF ToolsAdd to favoritesDownload CitationsTrack CitationsPermissions ShareFacebookTwitterLinkedInRedditEmail The medical profession and its leadership have loudly questioned the effect that marketplace-driven changes are having and will have on the practice of medicine and the physician–patient relationship [1]. For-profit health care delivery organizations are seen as having an unavoidable conflict between the interests of patients and those of shareholders [2, 3]. Some believe that physician-led organizations delivering health care would avoid the stockholder-satisfying mentality of many for-profit insurance companies and, therefore, that physician-directed enterprises would direct more resources toward patient care and fewer into providing a return on stockholders' investments [4]. However, these conclusions depend on the assumption that physicians will act differently than managed care companies when faced with the economic imperative of a fully prepaid system in which they are at full financial risk. Implicit in previous criticisms of the efforts of insurance companies to manage medical care is the concern that medical management really means denial of needed services.It is widely believed that if physicians could control the system and use clinical judgment to steer patients through the maze of diagnostic and therapeutic choices of modern medicine, profits might be lower but patient interests would be enhanced. Physician-led health maintenance organizations have been proposed in several locations as a way to apply this belief.In this issue, Kerr and colleagues [5] raise important concerns about these assumptions. When faced with the daunting dual tasks of caring for patients' physical well-being and bearing the financial risk of their care, physician-owned groups seem to gravitate toward the same devices used by insurance companies to save costs. These devices include the use of a primary care physician as a gatekeeper, preauthorization programs in which nurses or physicians judge the appropriateness of referrals for specialty care or complex and expensive diagnostic procedures and, to a lesser extent, the creation of guidelines or other educational tools to help clinicians provide care. Kerr and colleagues studied both medical groups and independent practice associations; for the most part, these groups were reimbursed through a capitated system in which all the care of all subscribers in a given health plan was prepaid. Preauthorization was required for various tests, and the oversight process was typically applied to the more costly procedures. Is this bad?Little evidence suggests that these utilization controls really save costs. The savings attributed to the management of care by insurance companies may be more related to control of the cost per service than to the volume of services performed, but few good data are available to analyze this question. Some truly unnecessary services are undoubtedly avoided because of the oversight provided by utilization management activities, but the quantitative importance of this activity must be defined more rigorously. Conversely, little evidence shows that the provision of more care than managed care techniques have deemed necessary leads to better clinical outcomes or even more satisfied patients. In fact, just the opposite may be deduced from the findings of one study [6]. When faced with 1) the lack of evidence that the processes of concurrent utilization management and preauthorization of the use of various clinical and professional services lead to the systematic denial of needed medical services and 2) with previous experience in dealing with insurance companies that use the techniques described by Kerr and colleagues, physician-led groups have apparently concluded that managing care by using traditional insurance company-style monitoring techniques is not so bad.Some important questions must be addressed in future research in this important area. First, do the methods of case management as used by physician groups lead to a fundamentally different level of care, that is, to the use of more services than are provided through insurance company-directed approaches? I suggest using a two-tailed t-test for this analysis because I believe that it is as likely that the physician groups will be stricter in their utilization criteria than the insurance companies.Second, do multispecialty physician groups approach utilization management differently than primary care groups? In the multispecialty group, subspecialists can be brought into the utilization management process as educators and as partners of the primary care physicians in the care of unusual or more complex forms of illness. In addition, the specialists can receive ongoing training in integrating the care of patients who have complex disorders with the latest approaches to preventive medicine. In the multispecialty group model, all physicians may be reimbursed through capitation arrangements, and denying a visit to the specialist has no economic advantage. Also, the specialist bears part of the financial risk of the cost of care for all patients in the health plan. In the primary care group model, referral to the specialist leads to paying for services outside of the group; referrals may therefore be more restricted than with the multispecialty group. These speculations require that data be collected to compare utilization management under physician control in the multispecialty group with that in the primary care group model.Do the results of the article by Kerr and colleagues tell us that, when faced with the demands of marketplace-driven medicine, physicians act in a manner similar to that of health professionals employed by insurance companies in managing the use of services? The data do not allow that conclusion. Until analyses on the care of matched populations managed under the two models are done and the above-mentioned questions are answered, we had best be circumspect in our criticisms of the health maintenance organization case manager.@copy; 1995 American College of PhysiciansReferences1. Kassirer JR. Managed care and the morality of the marketplace. N Engl J Med. 1995; 333:50-3. Google Scholar2. Rodwin MA. Conflicts in managed care. N Engl J Med. 1995; 332:604-7. Google Scholar3. Stevens CM. Health care cost containment: some implications of global budgets. Science. 1993; 259:16-7. Google Scholar4. Relman AS. Controlling costs by managed competition—would it work? [Editorial]. N Engl J Med. 1993; 328:133-5. Google Scholar5. Kerr EA, Mittman BS, Hays RD, Siu AL, Leake B, Brook RH. Managed care and capitation in California: how do physicians at financial risk control their own utilization? Ann Intern Med. 1995; 123:500-4. Google Scholar6. Lurie N, Christianson J, Finch M, Moscovice I. The effects of capitation on health and functional status of the Medicaid elderly. A ran-domized trial. Ann Intern Med. 1994; 120:506-11. Google Scholar Comments0 CommentsSign In to Submit A Comment Author, Article, and Disclosure InformationAffiliations: From Graduate Health System Philadelphia, PA 19103.Corresponding Author: Stanley Goldfarb, MD, Graduate Health System, 2129 Chestnut Street, Philadelphia, PA 19103. PreviousarticleNextarticle Advertisement FiguresReferencesRelatedDetailsSee AlsoManaged Care and Capitation in California: How Do Physicians at Financial Risk Control Their Own Utilization? Eve A. Kerr , Brian S. Mittman , Ron D. Hays , Albert L. Siu , Barbara Leake , and Robert H. Brook Metrics Cited ByFinancial sustainability versus access and quality in a challenged health system: an examination of the capitation policy debate in GhanaPulmonary Practice Profiles: Results of a Practice Performance SurveyCost-effectiveness of early surgical intervention in silent osteolysisRevenue Streams and Clinical DiscretionPayment by Capitation and the Quality of CareMANAGED CARE 1 October 1995Volume 123, Issue 7Page: 546-547KeywordsHealth careHealth care utilizationHealth insuranceHealth maintenance organizationsMedical servicesNursing educationPopulation statisticsPreventive medicinePrimary care physiciansSub-specialty care Issue Published: 1 October 1995 CopyrightCopyright © 1995 by American College of Physicians. All Rights Reserved.PDF DownloadLoading ...