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Characteristics of Medical Practices in Three Developed Managed Care Markets


  • Bruce E. Landon,

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    • Address correspondence to Bruce E. Landon, M.D., M.B.A., Associate Professor of Health Care Policy and Medicine, Department of Health Care Policy, Harvard Medical School, 180 Longwood Avenue, Boston, MA 02115. He is also with the Division of General Medicine and Primary Care, Beth Israel Deaconess Medical Center. Sharon-Lise T. Normand, Ph.D., is Associate Professor of Biostatistics, Department of Health Care Policy, Harvard Medical School, and is also with the Department of Biostatistics, Harvard School of Public Health. Richard Frank, Ph.D., is Professor of Health Economics, Department of Health Care Policy, Harvard Medical School. Barbara J. McNeil, M.D., Ph.D., is Professor and Chair, Department of Health Care Policy, Harvard Medical School.

  • Sharon-Lise T. Normand,

  • Richard Frank,

  • Barbara J. McNeil


Objective. To describe physician practices, ranging from solo and two-physician practices to large medical groups, in three geographically diverse parts of the country with strong managed care presences.

Data Sources/Study Design. Surveys of medical practices in three managed care markets conducted in 2000–2001.

Study Design. We administered questionnaires to all medical practices affiliated with two large health plans in Boston, MA, and Portland, OR, and to all practices providing primary care for cardiovascular disease patients admitted to five large hospitals in Minneapolis, MN. We offer data on how physician practices are structured under managed care in these geographically diverse regions of the country with a focus on the structural characteristics, financial arrangements, and care management strategies adopted by practices.

Data Collection. A two-staged survey consisting of an initial telephone survey that was undertaken using CATI (computerized assisted telephone interviewing) techniques followed by written modules triggered by specific responses to the telephone survey.

Principal Findings. We interviewed 468 practices encompassing 668 distinct sites of care (overall response rate 72 percent). Practices had an average of 13.9 member physicians (range: 1–125). Most (80.1 percent) medium- (four to nine physicians) and large-size (10 or more physicians) groups regularly scheduled meetings to discuss resource utilization and referrals. Almost 90 percent of the practices reported that these meetings occurred at least once per month. The predominant method for paying practices was via fee-for-service payments. Most other payments were in the form of capitation. Overall, 75 percent of physician practices compensated physicians based on productivity, but there was substantial variation related to practice size. Nonetheless, of the practices that did not use straight productivity methods (45 percent of medium-sized practices and 54 percent of large practices), most used arrangements consisting of combinations of salary and productivity formulas.

Conclusions. We found diversity in the characteristics and capabilities of medical practices in these three markets with high managed care involvement. Financial practices of most practices are geared towards rewarding productivity, and care management practices and capabilities such as electronic medical records remain underdeveloped.