Primary Care Physicians' Experience of Financial Incentives in Managed-Care Systems

BACKGROUND: Managed-care organizations' use of financial incentives to influence the practice of primary care physicians is controversial. We studied the prevalence and effects of these incentives. METHODS: We surveyed a probability sample of primary care physicians practicing in the largest urban counties in California in 1996. The physicians were asked about the types of incentives they encountered, the amount of income that was keyed to incentives, their experience of pressure in their practices, and the ways in which such pressure affected patient care. RESULTS: Data were analyzed for 766 physicians involved in managed-care systems. Thirty-eight percent of these physicians reported that their arrangements with the managed-care system included some type of incentive in the form of a bonus. Fifty-seven percent of the physicians reported that they felt pressure from the managed-care organization to limit referrals (17 percent said they believed such pressure compromised patient care), and 75 percent felt pressure to see more patients per day (24 percent believed such pressure compromised patient care). The physicians who reported that their financial arrangements included an incentive based on referrals were more likely than others to have felt pressured to limit referrals in a manner that compromised care (adjusted odds ratio 2.5; 95 percent confidence interval, 1.2 to 5.0), and physicians with an incentive based on productivity were more likely to have felt pressure to see more patients that they believed compromised care (adjusted odds ratio, 2.1; 95 percent confidence interval, 1.2 to 3.8). The physicians whose health care systems used incentives keyed to productivity were less likely than others to be very satisfied with their practices (adjusted odds ratio, 0.4; 95 percent confidence interval, 0.2 to 0.6), whereas those whose systems included incentives related to the quality of care or patients' satisfaction were more likely to be very satisfied (adjusted odds ratio, 1.8; 95 percent confidence interval, 1.1 to 3.0). CONCLUSIONS: Many managed-care organizations include financial incentives for primary care physicians that are indexed to various measures of performance. Incentives that depend on limiting referrals or on greater productivity apply selective pressure to physicians in ways that are believed to compromise care. Incentives that depend on the quality of care and patients' satisfaction are associated with greater job satisfaction among physicians.