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Patient Attitudes Toward Physician Financial Incentives
Anne G. Pereira, MD;
Steven D. Pearson, MD, MSc
Arch Intern Med. 2001;161:1313-1317.
ABSTRACT
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Background Despite concern about the impact of financial incentives on physician
behavior, little is known about patients' attitudes toward these incentives.
Objectives To assess patient attitudes toward physician compensation models and
to explore patient characteristics associated with these attitudes.
Methods We mailed a survey to 2000 adult patients in a large New England health
maintenance organization. We asked about their trust in their primary care
physician; discomfort with compensation models of salary with withhold (salary),
fee-for-service with withhold, and group capitation (capitation).
Results One thousand one hundred twenty-five (56%) of the 2000 patients who
responded expressed varying levels of discomfort with the proposed compensation
models: 16% for salary, 25% for fee-for-service with withhold, and 53% for
capitation (P<.001). Patients who knew their primary care
physician was paid through capitation did not report less trust in their primary
care physician but still frequently expressed discomfort (46%) with capitation.
Among all respondents, those who were younger, white, had better health, had
a higher income, were more educated, and who lacked a very trusting relationship
with a primary care physician were more likely to report discomfort with both
capitation and fee-for-service with withhold. In multivariable analyses, discomfort
with capitation was more common among white patients (odds ratio, 2.6; 95%
confidence interval, 1.6-4.2), patients with incomes exceeding $20 000
(odds ratio, 3.7; 95% confidence interval, 2.3-6.1), and college-educated
patients (odds ratio, 2.0; 95% confidence interval, 1.4-2.7).
Conclusions Most patients were uncomfortable with 1 or more of the 3 common methods
used to pay physicians. Discomfort was highest with capitation and was more
likely among wealthier, well-educated, white patients. With capitation increasing
nationally, patients' concerns should be considered in the design of compensation
agreements.
INTRODUCTION
IN THE PAST DECADE, there have been significant changes in how physicians
are paid in the United States.1-7
Different trends, including the increase in the number of physicians working
as employees of health care organizations, and intensified efforts to use
financial incentives to control costs and improve quality, have led to a tremendous
variety of physician compensation models. Yet, there are still 3 basic methods
of paying individual physicians: salary, fee-for-service, and capitation.4 To each of these basic structures are usually added
other components, chief among which are withholds and bonuses tied to the
use of services, to the quality of care, and/or to measures of patient satisfaction.
Previous research has explored how physicians believe financial incentives
affect patient care.8 However, while previous
research has studied the association between systems of care and health care
outcomes,9-12
to our knowledge, there are no data on associations between specific incentive
types and health care outcomes. Despite this lack of data, physicians and
the public have expressed strong concerns about the potential for "perverse"
incentives to interfere with physicians' judgment. Rising suspicion about
financial conflict of interest has spawned editorial anger, lawsuits, and
calls for full disclosure of physicians' compensation arrangements.13-15
While some research has described a correlation between methods of physician
payment and patients' satisfaction with, and level of trust in, their physicians,16 to our knowledge, no previous studies have specifically
assessed patients' expressed attitudes toward the 3 basic models of physician
payment in use today. How comfortable would patients be if their own primary
care physician (PCP) were paid by salary, by fee-for-service (FFS), or by
group capitation? Do they know how their own PCP is paid, and does this affect
their comfort with these incentive types? This study was designed to address
these questions, with an aim to inform current efforts to design compensation
structures that will be judged as trustworthy in the public's eye.
PATIENTS, MATERIALS, AND METHODS
STUDY SITE AND PATIENT SELECTION
The survey was performed among patients in Harvard Pilgrim Health Care
(HPHC), a large mixed-model health maintenance organization (HMO) in New England.
The Human Subjects Committee of the health plan approved the study design
and all survey instruments.
Patients were eligible if they were 25 years or older, had been a continuous
member of HPHC during the previous year, and had seen a clinician at least
once during that time. From among all eligible patients, a survey sample of
2000 patients was created: 1000 patients randomly drawn from the division
of the health plan that functioned as a staff model HMO, and 1000 patients
randomly drawn from the division of the health plan composed of affiliated
group practices. Both divisions served patients in the greater Boston area.
At the time of this survey the staff model HMO physicians' compensation was
based almost entirely on salary, with a 10% withhold on all salaries contingent
on the financial performance of the entire division. In the group practices
the proportion of patients with HPHC insurance varied. Each group practice
had a capitation agreement with the health plan.
SURVEY DEVELOPMENT AND ADMINISTRATION
A written survey was created and pilot tested among 1000 patients in
January 1997. Questions were retained for the final survey if they showed
useful test characteristics (low skip rate or no ceiling or floor effect)
in the pilot test. The survey was mailed out in February 1999; nonresponders
received one follow-up reminder.
MAIN OUTCOME MEASURES
Sociodemographic information and insurance source (employer-based, Medicare,
or Medicaid) were obtained from the computerized enrollment database of the
health plan. Health status was assessed by the physical functioning subscale
of the Medical Outcomes Study's Short Form-12 Item Questionnaire. Overall
health and satisfaction with the health plan were assessed on a 5-point scale
from excellent to poor.
Attitudes about compensation structures were measured by asking patients
how comfortable they would be if their health plan paid for their care in
one of several ways: salary with a less than 10% withhold, FFS with a less
than 10% withhold, and physician group capitation (Table 1). The descriptions of the payment structures were created
with advice from the health plan medical director to accurately describe the
broad outlines of the major methods of physician payment in use within the
plan. Patients recorded their level of comfort with each compensation method
on a 5-point scale from very comfortable to very uncomfortable. In reporting
the results we collapse very uncomfortable and uncomfortable together to compare
with all other responses.
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Table 1. Payment Descriptions
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Patients' level of trust in their own PCPs was measured by asking them
whether they agreed with the statement, "Overall, I have a very trusting relationship
with my primary care doctor." Patients rated their response on a 5-point scale
from strongly agree to strongly disagree. We considered patients to have a
very trusting relationship with their PCP if they agreed or strongly agreed
with the survey statement.
STATISTICAL ANALYSIS
 2 Test and t test statistics
were used for univariate comparisons between patient characteristics and the
level of discomfort with each payment type. Fisher exact test was used in
any cells that had fewer than 5 observations. Multiple logistic regression
was used for multivariable analyses to model these associations. Variables
were included in the multivariable model if they were associated with the
outcome variable in univariate analyses (P<.05).
RESULTS
DEMOGRAPHICS AND SATISFACTION
Of 2000 enrollees surveyed, 1125 (56%) responded. Respondents were older
than nonrespondents (mean age ± SD, 56 ± 16.5 vs 48 ±
15.2; P<.001) and were more likely to be female
(61% vs 55%, P = .007). The sociodemographic characteristics
of the respondents are listed in Table 2. Among respondents, 503 (45%) were in the staff model HMO; the
remaining 622 (55%) were in the affiliated group practices.
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Table 2. Characteristics of 1125 Patients
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Satisfaction with care experience in the health plan was high, with
839 (76%) of the respondents rating the overall quality of care they received
as excellent or very good, and only 42 (4%) of the patients rating their care
as fair or poor. Availability of care was also rated favorably: of all of
the respondents, 417 (74%) stated that their ability to get the health care
they needed was excellent or very good, and only 70 (6%) stated it was fair
or poor. Of all of the respondents, 716 (65%) rated their ability to see a
specialist as excellent or very good, and only 96 (9%) rated it as fair or
poor. Patients' level of trust in their individual PCPs was high as well:
only 29 (3%) of the patients disagreed or strongly disagreed with the statement,
"Overall, I have a very trusting relationship with my primary care doctor."
KNOWLEDGE OF COMPENSATION SYSTEM
When patients were asked to indicate how their PCP was paid through
the health plan, 657 (61%) stated that they did not know; there was no difference
between the staff model HMO patients and the patients in the affiliated group
practices (59% vs 63%, P = .17). Among patients in
the staff model HMO, 160 (33%) correctly answered that their PCPs were paid
by salary. Among patients in the group practices, only 39 (7%) correctly stated
that their PCPs were paid through group capitation.
Among all patients, only 2% reported ever having had a discussion with
their PCP about how the PCP was paid, but 62% of patients wanted to have more
information on this topic. Of those patients who wanted more information,
67% wanted it to come from their health plan, 15% wanted it to come from their
PCP, 6% wanted the information to come from both the health plan and their
PCP, and 12% were not sure which source they preferred.
In both the staff model HMO and in the group practices, patients' trust
in their PCP was high and did not seem to suffer as a result of knowing how
their PCP was paid. In fact, patients in the staff model HMO who knew correctly
that their PCP was paid by salary and a withhold were somewhat more likely
to report a very trusting relationship with their PCP than patients who said
they did not know how their PCP was paid (90% vs 83%, P = .06). In the group practices, the number of patients who knew their
PCP was paid through group capitation was small, but these patients had identical
levels of trust in their PCP as did patients who did not know how their PCP
was paid (both groups 90%, P = .90).
ATTITUDES ABOUT COMPENSATION SYSTEMS
There were marked differences in patients' attitudes toward the 3 compensation
structures. Among all respondents, 173 (16%) felt they would be uncomfortable
if their PCP were paid by salary with a less than 10% withhold; 259 (25%)
felt they would be uncomfortable if their PCP were paid by FFS with a less
than 10% withhold; and 563 (53%) indicated that they would be uncomfortable
if their PCP were paid based on group capitation (Figure 1). Among those patients who expressed discomfort with FFS
and/or capitation (n = 597), 222 (37%) were uncomfortable with both compensation
structures. Of all respondents, 101 (10%) were uncomfortable with all 3 financial
incentive descriptions.
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The repondents' level of comfort with compensation structures. FFS
indicates fee-for-service.
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Although the numbers are small, knowledge that one's own PCP was paid
through capitation did not seem to reduce discomfort with this form of compensation.
Of the 39 patients in the group practices who knew their PCPs were paid by
capitation, 18 (46%) expressed discomfort with capitation. Of the 338 patients
in the group practices who stated they did not know how their own PCP was
paid, 168 (50%) expressed discomfort with capitation (P = .68).
There were several patient characteristics that were correlated with
discomfort with both FFS and capitation (Table 3). Younger patients were more likely to express discomfort,
as were healthier patients. Wealthier patients and those with more education
were also more likely to express discomfort, as were patients with employer-based
insurance and those in the staff model HMO. Patients without a very trusting
relationship with their PCP were also more likely to express discomfort with
either type of compensation.
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Table 3. Univariate Correlates of Discomfort With Fee-for-Service and
Capitation for 1071 Respondents*
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In multivariable analyses, patients' income, education level, and type
of insurance remained significantly associated with their attitudes about
both FFS and capitation (Table 4).
An annual household income of more than $20 000 was the characteristic
most highly correlated with discomfort with both FFS and capitation (odds
ratio [OR], 2.3; 95% confidence interval [CI], 1.2-4.3 and OR, 3.7; 95% CI,
2.3-6.1, respectively). Patients with a college education were also more likely
to be uncomfortable with both FFS and capitation (OR, 1.7; 95% CI, 1.2-2.5
and OR, 2.0; 95% CI, 1.4-2.7, respectively). Patients in the staff-model HMO
were more likely to be uncomfortable with FFS than patients in the group practices
(OR, 1.7; 95% CI, 1.2-2.5).
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Table 4. Adjusted Odds Ratios for Patient Characteristics Associated
With Discomfort With Fee-for-Service (FFS) and Capitation*
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COMMENT
Testing patients' knowledge about how their health plan pays for their
care is complicated by the complexity of contractual arrangements among health
plans, physician groups, and PCPs.17 We specifically
asked patients about how their health plan paid for their care, but in many
cases this may not reflect how the individual PCP is paid through an intermediary
physician group.18-19 Our study
found that most patients knew little about how their health plan paid PCPs
for care, a finding consistent with previous research.20
Most patients in this study did want to know more about how their PCP was
paid, but very few had ever had a discussion about this with their own PCP.
When asked, hypothetically, how they would feel if their PCP was paid
through each of 3 common payment methods, most patients expressed discomfort
with 1 or more. More than half of all patients said they would be uncomfortable
if their PCP were paid through group capitation, while a quarter of the patients
were uncomfortable with a payment based on FFS with a less than 10% withhold
on use. Salary with withhold was the most acceptable compensation structure,
but 16% of patients indicated that they would be uncomfortable or very uncomfortable
with even this relatively mild form of financial incentive.
The high rate of discomfort with capitation has added significance given
the increasing rates of capitated care nationally.6
Almost half (46%) of the patients in this study who knew that their own PCP
was paid through capitation still indicated that they were very uncomfortable
or uncomfortable with that method of compensation. Interestingly, while expressing
discomfort with the idea of capitation, these patients did not demonstrate
reduced trust in their own PCPs. Our results suggest that it is possible that
discomfort with the concept of capitation may not penetrate through to erode
the trust that has been established in an existing patient-physician relationship.
Given the common perception that capitation and FFS offer opposing financial
incentives to PCPs,21-23
the discomfort with both FFS and capitation that many patients expressed seems
paradoxical. On further analysis, however, the common element that bothered
patients may have been conflict of interest.24
Under both FFS and capitation patients may have perceived a link between the
quantity of patient care and the income their PCPs receive. Patients may not
be accustomed to thinking about any association between their PCP's clinical
decisions and income considerations,25 and
the discomfort the patients reported may thus be a nonspecific response to
this association.
Patients who were well educated and wealthy expressed more discomfort
with both FFS and capitation. Their higher levels of discomfort may arise
from a greater exposure to negative media attention to HMOs, particularly
with concerns that financial incentives might influence physicians' clinical
decisions.26 Also, this group of patients may
be more willing to question the value of their health plan, whereas a more
vulnerable population (poor or less educated) may have fewer health care options
and thus be more accepting of their current health plan and provider group.
Because of regional differences in the prevalence of managed care, it
is difficult to generalize these patients' attitudes to a broader population.
However, New England has some of the highest rates of managed care in the
nation, and of capitation in particular, and like the rest of the country,
these rates are steadily climbing here.6 The
attitudes of patients in this area may serve to predict nationwide attitudes
in the future.
The high levels of expressed discomfort in our study are relevant in
the context of recent efforts to mandate financial disclosure by health plans
and/or PCPs. Currently,22 states require HMOs
to explain physician financial incentive systems to enrollees,27
and since January 1997 the Health Care Financing Administration has required
managed care organizations to inform Medicare beneficiaries about their financial
incentive structures.28 Current policy statements
by the American Medical Association urge disclosure of incentives by physicians,29 but there is some concern that disclosure without
careful forethought will be potentially disruptive to the patient-physician
relationship.15, 25
Some researchers are attempting to develop and test communication strategies
for physicians to aid them in the discussion of financial incentives. Their
hope is to prevent disruption of the patient-physician relationship.30 Although very few of the patients we surveyed were
aware of how their own PCP was paid, there was no evidence that this knowledge
was associated with a less trusting relationship with their PCP. While efforts
to develop communication strategies proceed, further research is necessary
to help understand the specific nature of patients' concerns about financial
incentives, and to explore how these concerns may affect their trust in their
own PCPs.
AUTHOR INFORMATION
Accepted for publication November 21, 2000.
Dr Pearson is a Robert Wood Johnson Foundation Generalist Faculty Scholar.
Corresponding author: Steven D. Pearson, MD, MSc, Department of Ambulatory
Care and Prevention, 126 Brookline Ave, Suite 200, Boston, MA 02446 (e-mail: steven_pearson{at}hphc.org).
From the Center for Ethics in Managed Care, and the Department of
Ambulatory Care and Prevention, Harvard Medical School and Harvard Pilgrim Health Care, Boston, Mass.
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