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Are Family Physicians good for you?

October 1, 2008 in Physician Compensation, Supply of Medical Services | Permalink

Does an increase in family physicians (FPs) increase individual health? A naive research might believe that we could uncover whether or not this was true by comparing the average health levels of areas with lots of doctors with the average health levels of areas with few doctors. However, doctors often work where there are lots of sick people. Thus we can find a spurious correlation between FP quantity and individual health level.

Gravelle, Morris and Sutton (HSR 2008) aim to find the true relationship between FP quantity and individual health. They use data from the Health Survey for England and the General Medical Services (GMS) Statistics database. The authors note that family physicians may be attracted to areas where healthy patients live if these areas have attractive amenities not captured in the data. On the other hand, FPs might be attracted to areas where lots of sick people live since FP compensation is based on an age-related capitation payment. The authors claim that the following 2 instruments will be correlated with physician supply but uncorrelated with individual patient health: semidetached house prices and age-related capitation payments.

In the first stage, Gravelle and co-authors find that a larger age-related capitation payment attracts more FPs while increased house price decreases FP supply. The authors conclude the following:

“FP supply is positively associated with individual self-assessed health. If no allowance is made for the endogeneity of FP supply, the effect is not statistically significant…When FP supply is instrumented by age-related capitation, a 1 SD increase in FP supply increases the probability of reporting very good health by 4.1 percent. The results are robust to transformations of the health variable and to alternative specifications of the effects of individual age on health.”

Appendix

In the paper, the authors use the ln(FP supply) as the key dependent variable. However, ln(FP supply) is an estimated figure. Thus, when the authors calculate the standard errors, they use a bootstrap methodology as follows:

  1. Draw a sample of 351areas (local authorities) with replacement from the area-level data set.
  2. Estimate the ln(FP supply) equations for each of the 3 years—1997, 1998, and 1999.
  3. Estimate the individual-level health equation using predicted ln(FP supply) plus the individual and area-level covariates. The individual observations are weighted by the number of times the LA in which an individual lives was drawn in the first stage bootstrap sample.

The reported standard error of the instrumented ln FP supply coefficient is the standard deviation of the estimated coefficients on ln FP supply from 200 replications of this procedure.

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Cochrane Review: The effect of capitation, fee-for-service (FFS) and mixed payment systems on primary care physician behavior

July 21, 2008 in Academic Articles, Physician Compensation | Permalink

Primary care physicians can be compensated in a number of ways. The most popular are capitation, fee-for-service, salary, or some mixture of the three. But how does the physician compensation method affect care levels? This is the question Gosden et al. (2000) try to answer in their Cochrane review. The authors search the literature for randomized trials or controlled before and after studies in order to see how changing physician compensation affects the quantity and quality of care.

A summary of the 4 papers which met Gosden et al.’s criteria is below.

Category Davidson 1992 Hickson 1987 Krasnik 1990 Hutchinson 1996
Country US US Denmark Canada
Type Randomized Trial Randomized Trial Before-and-After Before-and-After
Payment i) age-adjusted capitation; ii) Medicaid FFS; iii) more lucrative FFS i) FFS; ii) Salary Control: Cap/FFS mix; Intervention: Capitation only, changes to Cap/FFS mix Before: FFS; After: mixed capitation, ambulatory care incentive
Physicians Primary Care Providers (PCPs) Residents General Practitioners (GPs) GPs/Family Physicians
Results Comparing FFS and capitation, there was no difference in the number of PCP visits. There was no difference in the number of patients attended The number of face-to-face and phone visits was higher in the control group than the intervention group. Hospital days decrease in all groups, but the change is similar across all payment types.

Controlling for covariates, there were 0.5-0.6 more visits for the capitation group compared to the Medicaid FFS. There were more ER visits for the salaried group compare to the FFS group. After the FFS was implemented in the intervention group, visits increased and converged to that of the control group.

The new, more lucrative FFS increase PCP visits by .8-.9 per patient compared to the Medicaid FFS. Salaried doctors have fewer well-child visits per enrollee After the FFS implementation [intervention group], the number of diagnostic and curative services order increased.

PCPs paid via capitation used fewer specialist and hospital resources After the FFS implementation [intervention group], the number referrals to specialists fell

Patients were less likely to reach recommended visit levels in capitation compared to FFS

The original four articles:

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