Physicians contracting with managed care.

Abstract

It has been observed that enrollees in managed care systems such as HMOs and PPOs have lower expenditures and utilization rates than those in conventional insurance plans. Few studies have investigated this issue by examining providers. This paper studies whether physicians with low costs are more likely to sign contracts with HMOs and PPOs in order to help explain the observation of lower expenditures and utilization rates by HMO and PPO enrollees. A logistic regression is applied to the data from the 1984-1985 Physician Practice Costs and Income Survey. The results do not show strong evidence that a physician's likelihood of contracting with HMOs and PPOs is related to the physician's practice costs and utilization pattern. Instead, major factors that significantly affect a physician's decision of contracting with managed care systems are the physician's socio-demographics, the physician's practice region, and the market conditions.