Effects of HMO Market Penetration on Physicians' Work Effort and Satisfaction

PROLOGUE: Almost since the beginning of the health maintenance organization (HMO) movement, critics and proponents have debated what the effects of managed care practice would be on the physicians engaging in it. In recent years a new element has entered into the controversy. Given the rapid expansion of managed care practice, are we embarked on a major overshoot in the number of physicians we are training? The general presumption underlying the debate and analytic work performed in this important domain is that a full-time-equivalent (FTE) physician is an FTE physician. This has been true because until recently there has been little reason to challenge this simple, functional concept and because the techniques and databases to perform more refined estimates of physician production have not been available. In this paper Jack Hadley and Jean Mitchell provide data that challenge these long-held ideas by showing that the hours worked and patients seen per week may be significantly less for HMO physicians and that their sense of satisfaction with their work may be diminished. Hadley is a professor at the Institute for Health Care Research and Policy and in the Department of Medicine at Georgetown University Medical Center in Washington, D.C., where he has been affiliated since 1984. He holds a doctorate in economics from Yale. Mitchell, who holds a doctorate in economics from Vanderbilt, is an associate professor at the Georgetown Public Policy Institute. Previously she was a member of the Social Science and Population Study Section at the National Institutes of Health. ABSTRACT: We investigate whether geographic variations in health maintenance organization (HMO) market penetration are associated with three aspects of physicians' practices: number of hours worked per year, number of patients seen per week, and satisfaction with the current practice. Based on multivariate regression analysis of data for 4,373 patient care physicians (under age forty-five) from a national random sample surveyed in 1991, we estimate that a doubling of the average level of HMO penetration is associated with statistically significant differences of 4 percent fewer annual hours, 13.7 percent fewer patients seen per week, and a 20 percent greater likelihood of not being very satisfied with one's current practice.