Study Shows Doctor Care Varies By Compensation Method

Troy Quast

Health care is a hot topic these days among political candidates, and the economics of health care is an important part of that debate.

Inequities, waste, rising costs, and eroding trust by patients are among often-cited shortcomings in the present health care process.

Troy Quast, assistant professor of economics at Sam Houston State University, says that his research shows that the way in which doctors are paid may influence the level of care received by their patients.

Quast and two other researchers compared the two ways Medicaid managed care organizations pay their doctors--fee for service and fixed, or "capitation," in which doctors are paid a flat fee per month. They looked at care provided to children and to asthma patients.

In the case of well-child services, doctors in managed-care organizations that used fee-for-service arrangements exclusively provided more health care services than doctors in managed care organizations that also used fixed fee arrangements.

In the case of Medicaid asthma patients, the state pays for asthma medications, which can reduce a primary care physician's costs by limiting the need for future office visits to deal with asthma complications.

"By a small margin, patients in managed care organizations that paid some doctors via capitation were more likely to receive appropriate medication," Quast said. "So fee for service seemed to work better than capitation in well-child care, but not in asthma care."

Quast did the research while completing his doctoral dissertation at the University of Florida in 2006. He studied eight managed care organizations in a large state that he could not identify because of research confidentiality agreements.

His findings were noted in an article published in the October 2007 issue of Managed Care Magazine. An article he wrote along with David Sappington and Elizabeth Shenkman has also been accepted for publication at some unannounced date by the journal Health Economics.

"There's a push by policymakers to move Medicaid enrollees to join managed care," he said in the Managed Care Magazine article, "but it's important that policy makers are sure MCOs benefit the patient."

While various medical care policies and plans are being discussed by presidential candidates, Quast says that incentives should be taken into consideration.

"If we want to get the results we're hoping for, we have to be sure that doctors and hospitals have the right incentives," he said.

Quast has taught in the Department of Economics and International Business at Sam Houston State University since the fall of 2006.

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SHSU Media Contact: Frank Krystyniak
Jan. 31, 2008
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