• We are sorry, but NCBI web applications do not support your browser and may not function properly. More information
Logo of cmajCMAJ Information for AuthorsCMAJ Home Page
CMAJ. Mar 1, 1996; 154(5): 653–661.
PMCID: PMC1487544

Do physician-payment mechanisms affect hospital utilization? A study of Health Service Organizations in Ontario.

Abstract

OBJECTIVES: To determine whether payment of primary care physicians based on capitation, with an additional incentive payment for low hospital-utilization rates, resulted in lower hospital-utilization rates among patients of these physicians than among patients of physicians still paid on a fee-for-service basis. DESIGN: Retrospective cohort study. SETTING: Capitation-based and fee-for-service primary care practices in Ontario. SUBJECTS: Thirty-nine physicians whose method of payment was converted from fee-for-service to capitation during the period from June 1985 to January 1989 and 7 physicians who remained in fee-for-service practice, two of whom were matched with one physician in capitation-based practice on the basis of practice location, type of practice (academic v. community), hours of practice (part-time v. full-time), years since graduation, physician group size, practice size (number of patients), type of group (primary care v. multispecialty), sex, certification in family medicine, country of graduation (Canada v. other) and age. One physician in capitation-based practice was matched with only one physician in fee-for-service practice. OUTCOME MEASURES: Annual hospital-utilization rates (hospital separations or hospital days per 1000 patients in each practice) for the physicians paid on a capitation basis 3 years before, 1 year before and 3 years after they converted from fee-for-service payment and at corresponding periods for the matched physicians still paid on a fee-for-service basis. RESULTS: The mean annual rate of hospital days used, adjusted for the age and sex of patients as well as for their social-program-recipient status, fell from 1085 per 1000 patients (3 years before the conversion date) to 1030 (1 year before conversion) and to 954 (3 years after conversion) in capitation-based practices. For the matched physicians in fee-for-service practice, the rates during the corresponding periods were 1085, 1035 and 956 hospital days per 1000 patients. The pattern was similar for rates of hospital separations, adjusted for patient's age, sex and social-program-recipient status. There were no statistically significant differences between the rates of hospital utilization among patients of physicians in capitation-based practices and the rates among those of physicians in fee-for-service practices during each of the three periods, nor were there significant differences in the changes in rates. CONCLUSION: Capitation payment, with an additional incentive payment to encourage low hospital-utilization rates, did not reduce hospital use. Factors other than the method of physician payment appear to be responsible for the variations in hospital utilization among practices.

Full text

Full text is available as a scanned copy of the original print version. Get a printable copy (PDF file) of the complete article (2.6M), or click on a page image below to browse page by page. Links to PubMed are also available for Selected References.

Selected References

These references are in PubMed. This may not be the complete list of references from this article.
  • Hastings JE, Mott FD, Barclay A, Hewitt D. Prepaid group practice in Sault Ste. Marie, Ontario. I. Analysis of utilization records. Med Care. 1973 Mar-Apr;11(2):91–103. [PubMed]
  • Mott FD, Hastings JE, Barclay AT. Prepaid group practice in Sault Ste. Marie, Ontario. II. Evidence from the household survey. Med Care. 1973 May-Jun;11(6):173–188. [PubMed]
  • DeFriese GH. On paying the fiddler to change the tune: further evidence from Ontario regarding the impace of universal health insurance on the organization and patterns of medical practice. Milbank Mem Fund Q Health Soc. 1975 Spring;53(2):117–148. [PubMed]
  • Moore S. Cost containment through risk-sharing by primary-care physicians. N Engl J Med. 1979 Jun 14;300(24):1359–1362. [PubMed]
  • Moore SH, Martin DP, Richardson WC. Does the primary-care gatekeeper control the costs of health care? Lessons from the SAFECO experience. N Engl J Med. 1983 Dec 1;309(22):1400–1404. [PubMed]
  • Stearns SC, Wolfe BL, Kindig DA. Physician responses to fee-for-service and capitation payment. Inquiry. 1992 Winter;29(4):416–425. [PubMed]
  • Hillman AL, Pauly MV, Kerstein JJ. How do financial incentives affect physicians' clinical decisions and the financial performance of health maintenance organizations? N Engl J Med. 1989 Jul 13;321(2):86–92. [PubMed]
  • Krasnik A, Groenewegen PP, Pedersen PA, von Scholten P, Mooney G, Gottschau A, Flierman HA, Damsgaard MT. Changing remuneration systems: effects on activity in general practice. BMJ. 1990 Jun 30;300(6741):1698–1701. [PMC free article] [PubMed]
  • Randhawa J, Riley R. Trends in hospital utilization, 1982-83 to 1992-93. Health Rep. 1995;7(1):41–53. [PubMed]

Articles from CMAJ : Canadian Medical Association Journal are provided here courtesy of Canadian Medical Association

Formats:

Related citations in PubMed

See reviews...See all...

Cited by other articles in PMC

See all...

Links

  • Cited in Books
    Cited in Books
    PubMed Central articles cited in books
  • PubMed
    PubMed
    PubMed citations for these articles

Recent Activity

Your browsing activity is empty.

Activity recording is turned off.

Turn recording back on

See more...