Abstract
Although third parties have tried in various ways to contain health care costs, only a few abbreviated attempts have included questioning modes of treatment of individual physicians. This paper presents an economic and medical analysis of the actions of a small third party firm, U.S. Administrators, Inc. of Los Angeles (USA), which has intervened in the physician-patient relationship to contain costs. Our case study of USA's interaction with a group of physicians over a year's period suggests that the uncertainty of medical care and the reluctance of physicians to be second-guessed can make cost containment costly to the third party firms. Further, lack of an adequate information base and the questionable reliability of third party review may affect the medical validity of individualized cost-containment decisions. Some benefits may be gained, however, since health care payments can be denied in certain cases and physicians' cost consciousness can be raised for future cases.
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Additional information
Dr. Goldberg is Senior Staff Researcher, The Rand Corporation, and Associate Professor of Medicine, UCLA Medical School. Dr. Greenberg is Visiting Associate Professor of Managerial Economics, College of Business and Management, University of Maryland, College Park, Maryland 20742. Reprint requests should be addressed to Dr. Greenberg. The authors wish to thank Samuel X. Kaplan, President, U.S. Administrators, for his cooperation in furnishing the data for this article.
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Goldberg, G.A., Greenberg, W. Third party cost containment and the physician-patient relationship: A case study. J Community Health 7, 215–230 (1982). https://doi.org/10.1007/BF01325517
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DOI: https://doi.org/10.1007/BF01325517