News Release
EMBARGOED for release
Tuesday, March 9, 2004, 12:01 a.m. EST

For more information, contact:
Linda Loranger or Janet Firshein at 301-652-1558 or or or
Jon Gardner, Health Affairs



New Studies Show Financial Challenges Lead Physicians to Cut Back in Services and Increase Costs,
Making it More Difficult for Patients to Obtain Care

Bethesda, MD—Financial pressures are leading physicians to increase fees and cut back on traditional, less lucrative practices, resulting in impaired access to health care and increased costs for certain populations. A study released today in the March/April 2004 issue of Health Affairs details ways in which physicians are trying to make up for the declining revenue in the late 1990s due to managed care and the effects those changes are having on patients.

The study is one of several released today by Health Affairs that examines data on the changes physicians have made to combat the financial challenges presented by managed care and HMOs. It was based on data from the Community Tracking Study, and authored by Hoangmai Pham and Jessica May of the Center for Studying Health System Change, Kelly Devers of Virginia Commonwealth University, and Robert Berenson of the Urban Institute.

According to the study, access to care is threatened in cases where patients are seeking less profitable services or services with a high malpractice risk. The authors cite examples of physicians refusing to take calls in emergency departments (EDs) or demanding extra pay from hospitals. They are doing this in an effort to avoid both malpractice insurance costs due to increased risk of lawsuits associated with this care and the low-income and uninsured patients evaluated in EDs.

Seeking revenue beyond that of traditional professional services is not unusual for physicians, but it has intensified recently due to fiscal problems, according to the study. Growth in managed care, cuts in public program payments, and heightened liability insurance and labor costs are a few of the factors that caused physicians’ income to fall approximately 5 percent from 1995 – 1999. These factors are pushing physicians to attempt to raise payment rates; increase the uncovered services they offer, such as concierge care, cosmetic surgery, botox treatments, and complementary therapies; invest in and diversify ancillary services; and join specialty practices.

According to the authors, policymakers may need to revisit physician self-referral and anti-kickback laws regulating potential conflicts of interest as potential solutions to this growing problem. Restructuring financial incentives to protect access to care and contain cost may be necessary to protect the patient, the authors write.

Two additional studies in today’s issue of the journal examine the effect HMOs and managed care have on physicians’ and patients’ access to care.

Growth of Single-Specialty Medical Groups, shows an increase in the number of specialists—especially orthopedists and cardiologists—joining or forming large single-specialty medical groups. Most physicians are doing this to: cost-share the investment in equipment and facilities; gain negotiating leverage with health plans and reputations as high-quality groups; and access professional management to deal with a complex business and regulatory environment. Lawrence Casalino of the University of Chicago, Hoangmai Pham of the Center for Studying Health System Change, and Gloria Bazzoli of the Virginia Commonwealth University, use site-visit data from the Community Tracking Study to examine this trend.

Overlap in HMO Physician Networks shows that, increasingly, more physicians are participating in a variety of competing health care plans. In fact, the study, which assessed networks across the country, shows that a patient switching HMOs in a given area would be able to retain their physician about 50 percent of the time. The study was conducted by Michael Chernew and Catherine McLaughlin of the University of Michigan School of Public Health, Walter Wodchis of the Toronto Rehabilitation Institute and the Institute for Clinical Evaluative Sciences in Toronto, and Dennis Scanlon of Pennsylvania State University. The authors point out that recent enrollment trends in HMO point-of-service (POS) options and preferred provider organizations (PPOs) suggest that consumers are demanding broader networks with more overlap.

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. These articles are available for free on the journal’s Web site, Address inquiries to Jon Gardner at Health Affairs at 301.347.3930 or via email,


Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research.

©2004 Project HOPE–The People-to-People Health Foundation, Inc.