Study shows many patients don’t know how their doctor gets paid,yet are concerned about incentives to cut care

Boston, MA—March 5, 2001—A study by researchers at Harvard Medical School suggests that many people are unaware of how their physicians are paid and how different incentive-based physician payment methods may affect their care.

The study, led by Paul Cleary, HMS professor of medical sociology in the Department of Health Care Policy, and published in the March Journal of General Internal Medicine, found that while only about half of the respondents surveyed felt they should be informed about how their doctors are paid, most felt that certain kinds of common financial incentives would adversely affect their care. Cleary said that the results show a major gap in public understanding of managed care. "Most people don’t have any idea that physicians are paid in these different ways," he said.

The results come from a cross-sectional survey of more than 2,000 adult patients living in the cities of Atlanta, Baltimore/Washington D.C. and Orlando, Florida. Patients were asked how their physicians were paid and were given a choice between three general payment strategies, fee-for-service, salary, and capitation. Responses were compared with medical records. Thirty-eight percent of patients said they did not know how their physician was paid even when asked to choose among the three options.

When asked whether they wanted to be informed of how their doctor was paid, only 54 percent of patients said yes, which Cleary found surprising, given criticism of managed care in the media. "I think it may reflect a lack of awareness of what’s happening," he said. "They just may not realize there are all these variations." The lack of interest may also reflect that patients trust physicians to act in the patients’ best interests despite financial concerns.

Cleary believes that the study reflects a lack of awareness about how the health care system has evolved from the traditional system in which doctors are paid strictly on a fee-for-service basis. "Almost any kind of payment has a financial incentive to do certain things," Cleary said. "One of the goals historically of managed care was to rationalize and realign the incentives." The two most common strategies of managed care are to pay doctors on a salary basis to remove incentives to provide more services, or through capitation, to give physicians a fixed amount per patient no matter what care the patient receives or how much it costs to provide.

In addition to these basic strategies, many health care organizations use financial bonuses or withholds to modify physician behavior. Cleary’s group asked patients how they thought certain kinds of financial incentives would affect their care. Three quarters of respondents felt that offering physicians a bonus for ordering fewer than average tests might adversely affect patient care. "People are really concerned about managed care, and they think certain things they associate with managed care are bad, but they don’t know a lot about what actually is happening," he said.

Issues of disclosure have been debated by health policy leaders as managed care introduces new ways to promote cost-effective medical care. Although some patient advocates argue for mandatory disclosure of physician payment methods, critics question whether such complex information can be explained to patients and might undermine physician–patient trust. Even though knowledge about physician payment was not a priority for many of the study’s respondents, Cleary believes that managed care companies should be concerned that some of their common practices are viewed negatively by the public. "The physician–patient relationship is quite critical to successful medical care," he said. "If the patients don’t feel like they can trust the organization the doctor works for, it’s going to undermine that basic relationship."

The study was funded in part by the USQA Center for Health Care Research, formerly known as the Prudential Center for Health Care Research.