For Physicians, Money Matters

This is from Jason Shafrin at his blog:

Does physician compensation affect the quantity of medical care provided?  My paper “Operating on Commission” claims that the answer is yes.  I find that surgery rates increase 78% when patients switch from capitation to fee-for-service specialists.

A paper by Devlin and Sarma (2008) examines a similar question for Canadian family physicians.

Doctor Money


Comments (2)

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  1. Greg says:

    Fee for service means doctors have an incentive to overprovide. Capitation means they have an incentive to underprovide. Apparnetly they act on these incentives.

    Implication: We should not let third parties choose the method of payment.

  2. Gisele Guenard says:

    There is a Nurse Practitioner clinic initiative in Canada which bodes well for orphan patients, who can’t access primary care regardless of the compensation model. There has been a key development here: a group of Nurse Practitioners (NPs) in Sudbury (Ontario)is preparing to open a 2nd site as we speak. This is the first NP-Led clinic to open in Canada, and was championed by pioneer NPs Marilyn Butcher and Roberta Heale. All eyes here are on this historic development in access to care for orphan patients.
    The Sudbury region has 30,000 patients without access to Primary Care. In our system, Primary Care is care provided by Nurse Practitioners (all on some sort of salary) and Physicians (varying salary models such as FFS, and various capitation models)for the most part. For non-health care readers, primary care is the care you need on an ongoing basis to help you stay healthy or get treated for illnesses and injuries. You need Primary care when you are a newborn baby and through all your life stages. You need it when when you are pregnant, well, ill and dying. You need Primary Care when you have a sexually transmitted disease or other infection, mental illness, chronic disease and to learn to prevent complications after a stroke. And so on. Without Primary Care, you are forced to visit walk-in clinics, Emergency Departments (all sporadic care and very expensive to the public purse) or fend for yourself.
    Thanks to this effort (see for the actual 1st clinic), 5000 orphan patients will now have access to Primary Care. At the 1st site, 2000 patients already now ‘belong’ to an NP, who is able to provide their care, along with collaborating physicians when the case is beyond their scope of practice. The care NPs provide includes comprehensive assessments, prescribing medications, suturing wounds, ordering lab tests, ultrasounds and xRays, referring you to a specialist or collaborating physician and more. All 5000 patients will also have access to a Social Worker, Registered Nurse, Dietitian and Pharmacist. The 2nd site, in a small community (Lively Ontario) nearby, is slated to open in October of this year.
    The need is great for these patients, many of whom have not ‘had a doctor’ for many years. Many currently live in fear of having a major health problem, or complications of their existing chronic illness, as they wander from walk-in clinic to walk-in clinic trying to get prescriptions renewed or xRay results. There is an actual patient’s story on video at the SDNPC web site. This senior’s testimonial is an eye-opener, to say the least.
    Northern Ontario has reached the tipping point on ALC (Alternate Level of Care – patients waiting weeks and months in a hospital bed for a long term care placement), with a higher than normal percentage of the aging population, and lack of primary care. This NP thing is a major positive change initiative. With the Sudbury NP-led clinic as the model, 25 more Nurse Practitioner clinics are slated to open in Ontario. I have been in health care (nursing/academia/public health/management/hospital CEO/consulting) and consulting for over 30 years, and know that this NP initiative can literally transform the health care system, especially for any community with a primary care shortage. Gisele Guenard, CEO