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Financial incentives and diagnostic testing.

Financial incentives and diagnostic testing Last month I reported on a cost awareness program that reduced physician orders for diagnostic tests by 14 per cent (see Editor's Memo, July MLO).

Another program had just the opposite effect, but that was its intent. Doctors at a major chain of ambulatory care centers sharply increased the number of patient laboratory tests and X-rays after a bonus plan was instituted to boost revenues of the for-profit chain. A study of this incentive plan was recently published in the New England Journal of Medicine. (1)

The authors of the study found that physicians ordered 23 per cent more lab tests per patient visit and 16 per cent more X-rays during a three-month period after the incentive program was established, compared with the like period a year earlier, when a flat-rate salary was in effect (see Table I). Patient visits increased 12 per cent. The average charge per visit, adjusted for inflation, rose 7 per cent, while total monthly charges jumped 20 per cent.

The report is based on the experience of 15 doctors at different clinics owned by Health Stop, a chain of ambulatory care centers in the greater Boston area that voluntarily participated in the study. It is particularly interesting because it compares the practice patterns of the same doctors before and after Health Stop instituted a bonus program in mid-1985. While dozens of studies have examined the impact of incentives on doctors--with mixed conclusions--very few have compared the same doctors, working at the same facilities.

Prior to the bonus program, Health Stop doctors were paid at a flat rate of $28 an hour. Under the bonus plan, they were paid from $28 to $32 an hour or a percentage of the gross monthly charges they generated, whichever was higher. Doctors were ranked monthly based on the average charge per patient visit and the number of diagnostic tests performed. The rankings circulated among the doctors, and managers questioned those whose figures were considered too high or too low.

Among the 15 doctors who were studied, six generated sufficient revenue to get a bonus every month, earning an average of $5,045 per month, while seven physicians never received a bonus and earned an average of $4,291.

The 15 physicians generated similar increases in charges per month, regardless of their bonus status, indicating that an incentive program can induce a group of doctors to prescribe more services, even if only some of them benefit directly.

Appointment of MLO advisor

Joining MLO's Editorial Advisory Board effective this month is Robert P. De Cresce, M.D., M.B.A., director of laboratory services at Michael Reese Hospital and Medical Center in Chicago. Dr. De Cresce has written for MLO since 1987 and was a featured speaker at both the 1987 and 1988 MLO National Conference on Laboratory Management.

Dr. De Cresce coauthored two articles in our special 20th anniversary issue last July. His latest article, on the new immunoassay systems, appeared in MLO last month. He replaces Dr. Ed Roseman, who had served on our Advisory Board since 1977.

(1) Hemenway, D.; Killen, A.; Cashman, S; et al. Physicians' responses to financial incentives. N. Engl. J. Med. 322: 1059-1063, 1990.
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Author:Fitzgibbon, Robert J.
Publication:Medical Laboratory Observer
Article Type:editorial
Date:Aug 1, 1990
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