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Effects of medical practice structure on resource use.

Differences among physicians in the use of resources to treat similar patients continues to be a central issue in most of the proposals for health care reform. Much of the research in this area has focused on the magnitude of the variations[1-3] and on the effectiveness of interventions such as capitation payment or practice guidelines on physician practice styles.[4-8] Recently, this research has been broadened to include organizational factors. The central research issue relates to the effects of the structure of a physician's practice on how he or she uses resources to care for patients.

These structural issues have been difficult to study, largely because of the difficulties encountered in attempting to separate the effects of insurance status, health plan type, and physician characteristics from the influence of practice organizational factors. This has been particularly problematic in some of the early research that focused on HMOs. While HMO physicians have been found to use fewer resources than their fee-for-service counterparts, it is not clear what portion of the variance is related to differences in the structure of the practices rather than the payment system.[9-11] In fact, one study found that certain large multispecialty fee-for-service group practices have resource utilization rates similar to those in capitated HMOs.[12]

It is becoming increasingly clear that the organizational characteristics of medical group practices are key to this line of research. We propose that these organizations influence how physicans practice through the development of structural and cultural environments that support certain practice styles.

The mechanisms used to achieve these ends appear to be quite diverse. First, we know that group practices vary in their management and decision-making structures. Some have decentralized structures that support a great deal of variation in physician practice styles, while others have centralized decision forms that encourage conformity.[13,14] The availability of on-site technology and practice size have also been shown to be related to resource utilization.[15,16] The mechanisms used to pay physicians in group practices is another factor shown to influence resource use.[17,18] Finally, research focused on the organizational culture of medical groups appears to hold a great deal of promise. This research proposes that the culture of the medical group creates an overall style that includes resource utilization and influences the degree of conformity to this style among physicians.

While these studies provide useful information, they lack a unifying theory that relates the rather disparate findings. Some propose that utility theory and risk choices under conditions of uncertainty provide this unifying theory.[19-21] If so, organizational structures and cultures that reduce the uncertainty surrounding physician decision making, and that shift decision making from regret based on risk aversion to rational choice, will greatly improve the cost effectiveness of patient care.


[1.] Wennberg, J., and Gittelsohn, A. "Small Area Variations in Health Care Delivery." Science 182(117):1102-8, Dec. 14, 1973. [2.] Dowd, B., and others. "Inpatient Length of Stay in Twin Cities Health Plans." Medical Care 24(8):694-710, Aug. 1986. [3.] Pearson, R., and others. "Hospital Caseloads in Liverpool, New England, and Uppsala: An International Comparison." Lancet 2(567):559-66, Sept. 7, 1968. [4.] Dowd, B., and others. "Health Plan Choice and the Utilization of Health Care Services: a Tobit Model with Selectivity." Unpublished paper, 1968. [5.] Yelin, E., and others. "A Comparison of the Treatment of Rheumatoid Arthritis in Health Maintenance Organizations and Fee-for-Service Practices." New England Journal of Medicine 312(15)962-7, April 11, 1985. [6.] Everett, G., and others. "Effect of Cost Education, Cost Audits and Faculty Chart Review on the Use of Laboratory Services." Archives of Internal Medicine 143(5):942-4, May 1983. [7.] Nyman, J., and others. "Changing Physician Behavior: Does Medical Review of Part B Medicare Claims Make a Difference?" Inquiry 27(2):127-37, Summer 1990. [8.] Geertsma, R., and others. "How Physicians View the Process of Change in Their Practice Behavior." Journal of Medical Education 57(10 Pt 1):752-61, Oct. 1982. [9.] Perkoff, G., and others. "The Effects of an Experimental Prepaid Group Practice on Medical Care Utilization and Cost." Medical Care 14(5):432-49, May 1976. [10.] Burkett, G. "Variations in Physician Utilization Patterns in a Capitation Payment IPA-HMO." Medical Care 20(11):1128-39, Nov. 1982. [11.] Barr, J., and others. "Physician Decision Making: Effects of HMO Model Type and Characteristics of Medical Practice on Utilization." GHAA Journal 8(2):43-52, Winter 1987-88. [12.] Scitovsky, A. "The Use of Medical Services under Prepaid and Fee-for-Service Group Practice." Social Science and Medicine 15(2):107-16, June 1981. [13.] Kralewski, J., and Shatin, D. "Medical Group Practice in Minnesota." Minnesota Medicine 66(6):367-70, June 1983. [14.] Kralewski, J., and others. "Structural Characteristics of Medical Group Practices." Administrative Sciences Quarterly 30(1):34-45, March 1985. [15.] Epstein, A., and others. "The Effects of Group Size on Test Ordering for Hypertensive Patients." New England Journal of Medicine 309(8):464-8, Aug. 25, 1983. [16.] Eisenberg, J., and Nicklin, D. "Use of Diagnostic Services by Physicians in Community Practice." Medical Care 19(3):297-309, March 1981. [17.] Egdahl, R., and Taft, C. "Financial Incentives to Physicians." New England Journal of Medicine 315(1):59-61, July 3, 1986. [18.] Hillman, A., and others. "How Do Financial Incentives Affect Physicians' Clinical Decisions and the Financial Performance of Health Maintenance Organizations?" New England Journal of Medicine 321(2):86-92, July 13, 1989. [19.] Bell, D. "Regret in Decision Making under Uncertainty." Operations Research 30(5):961-81, Sept.-Oct. 1982. [20.] Feinstein, A. "The |Chagrin Factor' and Qualitative Decision Analysis." Archives of Internal Medicine 145(7)1257-9, July 1985. [21.] Hellinger, F. "Expected Utility Theory and Risky Choices with Health Outcomes." Medical Care 27(3):273-9, March 1989.
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Author:Kralewski, John
Publication:Physician Executive
Date:Jul 1, 1993
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