Article

International Journal of Health Care Finance and Economics

, Volume 10, Issue 1, pp 85-103

First online:

Has the influence of managed care waned? Evidence from the market for physician services

  • Hai FangAffiliated withDepartment of Health Systems, Management, and Policy, Colorado School of Public Health, University of Colorado Denver Email author 
  • , John A. RizzoAffiliated withDepartment of Economics & Department of Preventive Medicine, State University of New York at Stony Brook

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Abstract

Managed care has been the dominant organization of health care coverage in the United States, and seeks to achieve cost control by constraining services. The restrictive practices of managed care organizations have been widely criticized and the role of managed care in constraining health care services may be declining. Physician behavior is also believed to be influenced by the practices of managed care organization. This study examines the evolving nature of managed care and its restrictive effects on the provision of physician services. Physicians can choose whether and to what extent they are involved in managed care, so it is an endogenous decision. We employ instrumental variables method to correct for this endogeneity. Using data from the Community Tracking Study physician surveys from 2000–2001 and 2004–2005, we find that managed care organizations have became relatively less restrictive over time in terms of limiting the provision of physician services, compared to non-managed care organizations. These results suggest that managed care and non-managed care are converging in their effects on the provision of physician services.

Keywords

Managed care Physician services Physician behavior Endogeneity

JEL Classification

I11 I18