Lecture Health economics - Chapter 8: The physician market (Part 1)

Lecture Health economics - Chapter 8: The physician market (Part 1). This chapter presents the following content: Physician market structure, conduct in the physician market, physician market performance, physician practice management companies.

The Physician Market, Part Professor Vivian Ho Health Economics Fall 2009 These slides summarize material in Santerre & Neun: Health Economics, Theories Insights and Industry Studies, Southwestern Cengate 2010 OUTLINE Physician Market Structure Conduct in the Physician Market Physician Market Performance Physician Practice Management Companies Physician Market Structure Trends in Physician Numbers 1970 Total Number Patient care Total per 100,000 pop'n 1990 2003 2005 334,028 615,421 871,535 902,053 83.4% 81.9% 79.4% 161 244 295 304 Physician Market Structure (cont.) Physician Distribution by Major Specialties (Percent) 1975 2003 2006 Anesthesiology 3.3 4.4 9.98 Cardiovascular Diseases 1.8 2.6 5.02 Diagnostic Radiology 0.9 2.7 2.97 General Surgery 8.0 4.3 2.66 Opthamology 2.8 2.1 1.61 Orthopedic Surgery 2.9 2.7 4.7 Pathology 3.0 2.1 0.98 Psychiatry 6.1 4.6 1.28 Primary care specialists* 38.8 40.2 46.95 *The AMA defines primary care as including family practice, general practice, internal medicine, obstetrics/gynecology, and pediatrics Are there “too many” specialists and “too few” primary care docs? Proportion of specialists in U.S higher than in W European countries and Canada (60% vs 25-50%)  Specialists more prone to use new, hightech medical procedues  May explain why U.S medical costs per capita are highest in the world Matching Physician Supply & Requirements “Future physician supply does not appear well-matched with requirements (Politzer, 1996) A shortage of 33,000 primary care physicians is predicted by 2020 The same set of assumptions also generates a surplus of specialists Distribution of Physicians by Mode of Practice 1989 1998 1999 2001 Employment type Self-employed 70.1% 62.3 51.4 54.8 Employee 23.9 36.1 48.6 45.2 Independent contractor 6.0 1.6 Size of practice Solo Practice 37.4% 25.9 22.0 20.5 2-8 persons 25.5 29.0 2-9 persons 15.8 26.4 8+ persons 7.2 16.7 10+ persons 12.5 14.9 Most docs self-employed, but % is dropping Fall in solo practice docs, rise in salaried docs Reflects rise in ambulatory care by HMOs Distribution of Physician Revenues by Source of Payer Government Medicare Medicaid Private Priv Health Insurance Other Priv Funds Out-of-pocket 1980 30.5 17.4 5.2 69.4 35.3 3.9 30.2 2002 33.8 20.3 7.2 66.1 49.1 6.9 10.1 2007 33.7 20.1 6.9 55.9 49.4 6.5 10.4 % of revenues from Medicare/Medicaid high, but lower than for hospital sector % of revenues paid out-of-pocket also higher than for hospital sector Managed Care Reimbursement of Physicians MCOs hope to modify physician behavior in order to control costs 88% of all practicing docs in 2001 had at least one managed care contract In 2001, 49¢ of every $1 of physician revenue came from an MCO Are there barriers to entry? Requirements for licensure to practice  M.D from accredited med school  Internship or residency at recognized institution  Pass a medical exam Advantage  Protects public from incompetent doctors Disadvantage  State licensure boards controlled by physicians who can restrict entry to keep salaries high Determination of Adverse Events from Medical Records Nurses and medical records administrators screened records for signals of adverse events  Examples: Admission to any hospital after discharge, unfavorable drug reaction in hospital, neurologic defect at discharge Two board-certified internists of surgeons reviewed each screened record RESULTS 31,429 in original sample 30,195 located on first review 22,378 negative for screening criteria 7817 positive for screening criteria Figure The Record-Review Process Numbers of medical records are shown 7743 reviewed by physicians 1278 with adverse events 306 with negligence 6465 without adverse events 972 with no negligence Did the study cases sue for malpractice? Further analysis was limited to 280 negligence cases which occurred or were discovered in the index hospitalization 98 / 31,429 patients filed claims against 151 health care providers  Not all of these patients were victims of negligence, according to HMPS The sample estimates were re-weighted to represent the population of 2.7m discharges in 1984 STATEWIDE ESTIMATES 415 malpractice claims (2%) 27,197 adverse events due to negligence 26,764 with no malpractice claims (98%) 5396 with disability >6mo (42%) 2834 patients