Correspondence

For-Profit Health Plans

N Engl J Med 2004; 350:1469April 1, 2004

Article

To the Editor:

Although Schneider et al. (Jan. 8 issue)1 state that the results of their analysis of the rates of use of high-cost procedures is “counterintuitive,” I suggest that their data are an expected result of physician-reimbursement structures. Physicians largely determine utilization rates for “high-discretion” procedures, such as cardiac catheterization. In settings where it is profitable for the physician, if not the health plan, to increase utilization, that is exactly what will occur. Until the system is changed, patients will undergo catheterization for both diseases and dollars.

Saul Schaefer, M.D.
University of California, Davis, Davis, CA 95616
sschaefer@ucdavis.edu

1 References

1. 1

   Schneider EC, Zaslavsky AM, Epstein AM. Use of high-cost operative procedures in for-profit and not-for-profit health plans. N Engl J Med 2004;350:143-150
   Full Text | Web of Science | Medline

Author/Editor Response

Dr. Schaefer shares the concern of George Bernard Shaw, who wrote that no sane nation, “having observed that you could provide for the supply of bread by giving bakers a pecuniary interest in baking for you, should go on to give a surgeon a pecuniary interest in cutting off your leg.”1 Managed care is one type of system change that could counteract financial pressure to perform more procedures, especially if physicians are paid with the use of a capitation approach.2 Unfortunately, these cost-restricting approaches can also impede access for some patients.3

Our findings are counterintuitive to those who believe that the profit motive of for-profit health plans would drive them to reduce the use of surgical procedures. Dr. Schaefer's emphasis on the profit motive among physicians as an important influence on care reminds us that physicians may respond to fee discounts by increasing the volume of services.4 Health plans have tended to use capitation infrequently and instead have sought savings by negotiating discounts on fee-for-service payments. The higher unadjusted rate of surgical procedures that we observed among for-profit health plans, as compared with not-for-profit plans, would be consistent with the notion that in areas where for-profit plans successfully negotiate discounted fees, their strategy might paradoxically lead to an increase in the number of procedures performed, as surgeons and hospitals seek to offset lost income. The geographic adjusters included in our statistical models would minimize this effect.

Eric C. Schneider, M.D.
Harvard School of Public Health, Boston, MA 02115
eschneid@hsph.harvard.edu

Alan Zaslavsky, Ph.D.
Harvard Medical School, Boston, MA 02115

Arnold Epstein, M.D.
Harvard School of Public Health, Boston, MA 02115

4 References

1. 1

   Shaw GB. The doctor's dilemma. Baltimore: Penguin Books, 1954:7.
   

2. 2

   Berwick DM. Quality of health care. Part 5: payment by capitation and the quality of care. N Engl J Med 1996;335:1227-1231
   Full Text | Web of Science | Medline

3. 3

   Newhouse JP, Insurance Experiment Group. Free for all? Lessons from the RAND Health Insurance Experiment. Cambridge, Mass.: Harvard University Press, 1993.
   

4. 4

   Rice T. Physician payment policies: impacts and implications. Annu Rev Public Health 1997;18:549-565
   CrossRef | Web of Science | Medline

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