Impact of Physician Supply and Regulation on Physician Fees and Utilization of Services

摘要

Concerned about how competition affects physicians' fees and utilization decision, led Blue Cross/Blue Shield of Michigan to design a study to address, in depth, these two behavioral questions, viz., the impact of insurance on utilization and fees and the existence of physician demand inducement. A model of price inducement with downward price rigidity due to Usual, Customary, and Reasonable (UCR) reimbursement methods that key on stated charges was developed. The findings of the detailed micro-investigation of one large state have important implications for public policy more broadly. First, all of the work confirms the hypothesis that geographic disparities in the level and growth of physician services and not fees provide a major impetus to physician expenditure growth. Second, findings about the extent of bordercrossing, point to a technical problem in calculating what Medicare HMOs ought to be paid. As for the relationship between physician supplies and expenditures, availability alone generates more use, then it may be somewhat academic whether physicians consciously shift demand, unconsciously follow established practice patterns that raise utilization, or are simply more readily available to patients. Greater physician supply, however, can be used to advantage, even though it provides no panacea by itself. As more physicians are left to divide a relatively fixed caseload (intensity per case is more variable), individual caseloads fall. This should make physicians as a whole amenable to some form of managed care, i.e., HMOs, IPAs, PPOs. And under fixed payment, they should be less likely to recommend marginal care.