Measuring the effects of managed care on physicians' perceptions of their personal financial incentives.

Using data from the 1997 Resurvey of Young Physicians (N = 1,549), this study examines whether several measures of physicians' contractual arrangements with health plans are associated with their perceptions of overall financial incentives to either decrease or increase the volume of services to patients. Results indicate the following factors were significantly associated with an increased likelihood of reporting an incentive to decrease services: a gatekeeper arrangement with a compensation incentive; the perception of a high risk of plan deselection for physicians with high costs; the perception that referrals received depended on the costs of care provided; communication prohibiting or discouraging the disclosure to patients of the physician's financial relationship with the health plan; receiving capitation payments from at least one plan; and employment in a health maintenance organization. Being compensated on a fee-for-service basis or receiving a salary with incentive or bonus provisions (compared to straight salary) were associated with an increased likelihood of reporting an incentive to increase services to patients. Physicians' overall methods of compensation had a relatively small impact on their perceived financial incentives compared to other statistically significant factors. Our findings suggest that physicians' self-reported, overall personal financial incentives within their practices are a valid summary measure of the heterogeneous mix of specific financial arrangements faced by most physicians.