Rhetoric or Reality: Are Health Systems Redesigning How Health Care Is Delivered?

Policymakers continue to set aggressive targets for alternative payment model engagement, aiming to spur a transition from volume- to value-oriented payment to drive performance improvements. However, the extent to which payments to providers have transitioned to paying for value is unclear. Given their greater ability to enter into payment arrangements with financial risk, health systems may be particularly well-positioned to reflect value-orientation in their physician compensation and incentives. In this study, we sought to characterize frontline physician compensation and financial incentives for health system affiliated physician organizations (POs). Between 2017 and 2019, we fielded surveys and conducted semi-structured interviews with leaders of POs affiliated with health systems. The interviews elicited the structure and features of compensation arrangements for primary care physicians (PCPs) and specialists and the POs’ revenues and incentives from payers. The survey addressed the structure of financial incentives and the top three actions physicians could take to increase their compensation. We assessed the frequency of compensation and financial incentive components and the association between POs’ fee-for-service revenue and their physicians’ productivity-based compensation. A purposive sample of 28 POs in 24 not-for-profit health systems in California, Minnesota, Wisconsin, and Washington, of which all provided PCP compensation information and all but 2 provided specialist compensation information. Among included POs, financial performance incentives were used by 25 (89.3%) for PCPs, averaging 4.0% of total compensation (range 0.05% to 13.72%) and 16 (61.5%) for specialists, averaging 3.1% of compensation (range 0.5% to 13.0%). Productivity was the most common base compensation component for both PCPs (24 POs, 85.7%) and specialists (25 POs, 96.2%). Capitation and salary were also commonly used for both PCPs (8 POs, 28.6% and 6 POs, 21.4%, respectively) and specialists (3 POs, 11.5% and 6 POs, 23.1%, respectively). When included as a component of PCP compensation productivity averaged 62.4% of compensation, salary 62.5%, and capitation 46.1%. Increasing productivity was cited as the top action physicians could take to increase their compensation by 19 POs (67.9%) for PCPs and 19 POs (73.1%) for specialists. Improving clinical quality was next most commonly cited action to increase compensation for both PCPs and specialists. The correlation between PO’s percent fee-for-service revenue and their physicians’ percent productivity-based compensation was moderately positive (r = .52) for PCPs and weakly positively for specialists (r = .40). Among health system POs, productivity is the most prominent component of PCP and specialist compensation and the most commonly noted means for physicians to increase their income. Financial performance incentives were commonly used but comprised a very small portion of total compensation. POs’ fee-for-service revenue percentage was more strongly positively correlated with the percentage compensation for productivity for PCPs than for specialists. Despite emphasis on transitioning from volume- to value-based payment, productivity remains the principal component of physician compensation in health system affiliated POs that may have greater capacity and motivation to develop alternate compensation and incentive schemes. The ongoing primacy of productivity incentives for frontline physicians is likely to blunt the impact of value-oriented payment and delivery system reforms. Agency for Healthcare Research and Quality.     

Salary and Quality Compensation for Physician Practices Participating in Accountable Care Organizations

BACKGROUNDThe accountable care organization (ACO) is a new organizational form to manage patients across the continuum of care. There are numerous questions about how ACOs should be optimally structured, including compensation arrangements with primary care physicians.METHODSUsing data from a national survey of physician practices, we compared primary care physicians’ compensation between practices in ACOs and practices that varied in their financial risk for primary care costs using 3 groups: practices not participating in a Medicare ACO and with no substantial risk for primary care costs; practices not participating in an ACO but with substantial risk for primary care costs; and practices participating in an ACO regardless of their risk for primary care costs. We measured physicians’ compensation as the percentage of compensation based on salary, productivity, clinical quality or patient experience, and other factors. Regression models estimated physician compensation as a function of ACO participation and risk for primary care costs while controlling for other practice characteristics.RESULTSPhysicians in ACO and non-ACO practices with no substantial risk for costs on average received nearly one-half of their compensation from salary, slightly less from productivity, and about 5% from quality and other factors. Physicians not in ACOs but with substantial risk for primary care costs received two-thirds of their compensation from salary, nearly one-third from productivity, and slightly more than 1% from quality and other factors. Participation in ACOs was associated with significantly higher physician compensation for quality; however, participation was not significantly associated with compensation from salary, whereas financial risk was associated with much greater compensation from salary.CONCLUSIONAlthough practices in ACOs provide higher compensation for quality, compared with practices at large, they provide a similar mix of compensation based on productivity and salary. Incentives for ACOs may not be sufficiently strong to encourage practices to change physician compensation policies for better patient experience, improved population health, and lower per capita costs.     

The alignment and blending of payment incentives within physician organizations

OBJECTIVE: To analyze the blend of retrospective (fee-for-service, productivity-based salary) and prospective (capitation, nonproductivity-based salary) methods for compensating individual physicians within medical groups and independent practice associations (IPAs) and the influence of managed care on the compensation blend used by these physician organizations. DATA SOURCES: Of the 1,587 medical groups and IPAs with 20 or more physicians in the United States, 1,104 responded to a one-hour telephone survey, with 627 providing detailed information on physician payment methods. STUDY DESIGN: We calculated the distribution of compensation methods for primary care and specialty physicians, separately, in both medical groups and IPAs. Multivariate regression methods were used to analyze the influence of market and organizational factors on the payment method developed by physician organizations for individual physicians. PRINCIPAL FINDINGS: Within physician organizations, approximately one-quarter of physicians are paid on a purely retrospective (fee-for-service) basis, approximately one-quarter are paid on a purely prospective (capitation, nonproductivity-based salary) basis, and approximately one-half on blends of retrospective and prospective methods. Medical groups and IPAs in heavily penetrated managed care markets are significantly less likely to pay their individual physicians based on fee-for-service than are organizations in less heavily penetrated markets. CONCLUSIONS: Physician organizations rely on a wide range of prospective, retrospective, and blended payment methods and seek to align the incentives faced by individual physicians with the market incentives faced by the physician organization.     

Effect of managed care and financing on practice constraints and career satisfaction in primary care

BACKGROUND: The shift away from third party insurers to risk-sharing arrangements affecting care management and clinicians could be the most fundamental change in the health care system. Analysis was undertaken to study how managed care, practice setting, and financial arrangements affect physicians' perceived impact on their practice. METHODS: Data were taken from the Community Tracking Study (CTS) physician survey, a national survey of active physicians in the United States fielded between August 1996 and August 1997. Survey instruments were completed by 7,146 primary care physicians in internal medicine (2,355), family practice (3,168), and pediatrics (1,623). The dependent variables are career satisfaction and perceived limitations and pressures on time spent with patients, clinical freedom, income, and continuity. To study the unique effect of financing and gatekeeping arrangements and practice setting, the dependent variables were regressed on gatekeeping, practice revenue, individual physician compensation, practice setting, specialty, age-group, sex, international medical graduate, board certification, and recent change in practice ownership. RESULTS: Total managed care revenue, or individual physician incentives, have no effect on career satisfaction and relatively limited effects on time pressure, income pressure, or patient continuity. In contrast, primary care gatekeeping has a highly significant adverse effect on the same outcome measures. After controlling for financial factors, demographic characteristics, and training differences, physicians in solo and 2-physician practices are significantly more likely to be dissatisfied with their medical career, more likely to report no clinical freedom, and more likely to feel income pressure than physicians in group practices, staff model HMOs, medical schools, or other settings. CONCLUSION: Physicians in solo and 2-physician practices were least satisfied with their careers and reported more constraints on their clinical freedom and income than physicians in other settings. Physicians in group practices or staff model HMOs are more likely to report time pressure than physicians in solo or 2-physician practices. Family practice falls between internal medicine (less satisfied, more practice constraints) and pediatrics (more satisfied, fewer practice constraints).     

The effects of medical group practice and physician payment methods on costs of care

OBJECTIVE: To assess the effects of payment methods on the costs of care in medical group practices. DATA SOURCES: Eighty-six clinics providing services for a Blue Cross managed care program during 1995. The clinics were analyzed to determine the relationship between payment methods and cost of care. Cost and patient data were obtained from Blue Cross records, and medical group practice clinic data were obtained by a survey of those organizations. STUDY DESIGN: The effects of clinic and physician payment methods on per member per year (PMPY) adjusted patient costs are evaluated using a two-stage regression model. Patient costs are adjusted for differences in payment schedules; patient age, gender, and ACG; clinic organizational variables are included as explanatory variables. DATA COLLECTION: Patient cost data were extracted from Blue Cross claims files, and patient and physician data from their enrollee and provider data banks. Medical group practice data were obtained by a mailed survey with telephone follow-up. PRINCIPAL FINDINGS: Capitation payment is correlated with lower patient care costs. When combined with fee-for-service with withhold provisions, this effect is smaller indicating that these two clinic payment methods are not interchangeable. Clinics with more physician compensation based on measures of resource use or based on some share of the net revenue of the clinic have lower patient care costs than those with more compensation related to productivity or based on salary. Salary compensation is strongly associated with higher costs. The use of physician profiles and clinical guidelines is associated with lower costs, but referral management systems have no such effect. The lower cost clinics are the smaller, multispecialty clinics. CONCLUSIONS: This study indicates that payment methods at both the medical group practice and physician levels influence the cost of care. However, the methods by which that influence is manifest is not clear. Although the organizational structure of clinics and their use of managed care programs appear to play a role, this influence is less than expected.     

Physician compensation models in medical group practice

This article examines physician compensation models in medical groups and the factors affecting physician compensation and their impact on individual physician behavior and group practice performance. Four categories of physician compensation models are identified: (1) production-based compensation, (2) salary, (3) group-based compensation unrelated to individual physician productivity, and (4) capitation-based compensation. The statistics and the economic incentives of different compensation methods are presented. Finally, the impacts on health resources consumption, charges in medical group procedures for utilization and care management, and quality of care are discussed.     

Characteristics of medical practices in three developed managed care markets

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.     

Managed care and primary physician satisfaction

BACKGROUND: We examined whether physician compensation, financial incentives, and care management tools were associated with primary physician job and referral satisfaction. Our study was guided by a conceptual model of physician satisfaction derived from published evidence. METHODS: A cross-sectional survey was performed of 495 primary physicians (family practitioners, general practitioners, general internists) in the Seattle metropolitan area in 1997. RESULTS: Bivariate analyses revealed that salary compensation, productivity bonuses, and withholds for referrals were associated with job and referral dissatisfaction. However, after controlling for physician, practice, and office characteristics, only the association between salary payment and job dissatisfaction remained significant. Practice in offices with more physicians had the strongest association with physician job dissatisfaction. CONCLUSIONS: Although managed care features are correlated with physician job and referral dissatisfaction, the source of dissatisfaction may originate from being an employed physician in a large medical group with more physicians, which may be more likely to impose bureaucratic controls that limit physician autonomy.     

Effects of Compensation Methods and Physician Group Structure on Physicians' Perceived Incentives to Alter Services to Patients

Objective. To examine how health plan payment, group ownership, compensation methods, and other practice management tools affect physician perceptions of whether their overall financial incentives tilt toward increasing or decreasing services to patients.
Data Source. Nationally representative data on physicians are from the 2000–2001 Community Tracking Study Physician Survey ( N =12,406).
Study Design. Ordered and multinomial logistic regression were used to explore how physician, group, and market characteristics are associated with physician reports of whether overall financial incentives are to increase services, decrease services, or neither.
Principal Findings. Seven percent of physicians report financial incentives are to reduce services to patients, whereas 23 percent report incentives to increase services. Reported incentives to reduce services were associated with reports of lower ability to provide quality care. Group revenue in the form of capitation was associated with incentives to reduce services whereas practice ownership and variable compensation and bonuses for employee physicians were mostly associated with incentives to increase services to patients. Full ownership of groups, productivity incentives, and perceived competitive markets for patients were associated with incentives to both increase and reduce services.
Conclusions. Practice ownership and the ways physicians are compensated affect their perceived incentives to increase or decrease services to patients. In the latter case, this adversely affects perceived quality of care and satisfaction, although incentives to increase services may also have adverse implications for quality, cost, and insurance coverage.     

How geisinger structures its physicians' compensation to support improvements in quality, efficiency, and volume

The movement of US physicians toward working as employees rather than working as private practitioners is increasing interest in compensation systems that drive improved quality and efficiency without compromising the productivity of existing fee-for-service payment systems. We describe the approach of Geisinger Health System, an integrated delivery system in Pennsylvania that assigns about 20?percent of total expected physician compensation to incentives that support improvements in quality and efficiency along with growth in clinical volume. We believe that dedicating a moderate portion of physician compensation to achieving strategic goals, such as maximizing quality and efficiency, is improving the value of care provided at Geisinger. At the same time, because most of Geisinger's clinical care is still delivered and paid for on a fee-for-service basis, the incentives for clinical volume are enabling Geisinger to achieve the financial viability to pursue its mission.     

The remuneration of dentists in a special project of the Israeli Defence Forces

The behavior of health care professionals is known to be influenced, in part, by their method of remuneration and the financial incentives they face. Describes how the Medical Corps of the Israel Defence Forces (IDF) went about choosing a reimbursement method to increase incentives for dentists and decrease waiting time for the public. Based on q questionnaire sent to all 23 dentists working in a unique IDF civilian dental clinic, and on other information which was available on the productivity and income of these dentists, a new method of remuneration was suggested and accepted, by which a combined method of fee-for-service and salary will be introduced. The base hourly pay and per crown fee were set on levels which provide for a larger compensation range and increase the incentive for improved productivity levels. This suggested method will be investigated further and re-evaluated one year after its implementation.     

The impact of managed care and practice size on primary care physicians' perceived ability to refer

OBJECTIVES: To identify the determinants of primary care physicians' perceived ability to refer patients, to compare perceived ability to refer between solo/two-physician practices and group practices, and to determine the impact of managed care on perceived ability to refer. METHODS: Multivariate analysis using a dataset derived from the Community Tracking Study Physician Survey, 1996-1997. The variables used to explain physicians' perceived ability to refer included physician and practice characteristics as well as aspects of the financial arrangements of managed care. The sample was stratified by practice size. A likelihood ratio test was performed to determine whether there were differences in practice characteristics and managed care financial arrangements that could explain variations in perceived ability to refer between physicians in solo/two-physician and group practices. RESULTS: Perceived ability to refer did not vary much between physicians in solo/two-physician practices and those in group practices. However, the determinants of perceived ability to refer did vary by practice size. The effects of physicians' characteristics were more pronounced among physicians in group practice, whereas the effects of financial arrangements were significant for physicians in solo/two-physician practices. The most significant determinant of perceived ability to refer was primary care physicians' satisfaction in their communication with specialists. CONCLUSION: Group practices are more immune than solo/two-physician practices to external financial arrangements from managed care contracts, possibly through their ability to take advantage of economies of scale and to diversify their sources of funds.     

The impact of financial incentives on physician productivity in medical groups

OBJECTIVE: To estimate the effect of financial incentives in medical groups--both at the level of individual physician and collectively--on individual physician productivity. DATA SOURCES/STUDY SETTING: Secondary data from 1997 on individual physician and group characteristics from two surveys: Medical Group Management Association (MGMA) Physician Compensation and Production Survey and the Cost Survey Area Resource File data on market characteristics, and various sources of state regulatory data. STUDY DESIGN: Cross-sectional estimation of individual physician production function models, using ordinary least squares and two-stage least squares regression. DATA COLLECTION: Data from respondents completing all items required for the two stages of production function estimation on both MGMA surveys (with RBRVS units as production measure: 102 groups, 2,237 physicians; and with charges as the production measure: 383 groups, 6,129 physicians). The 102 groups with complete data represent 1.8 percent of the 5,725 MGMA member groups. PRINCIPAL FINDINGS: Individual production-based physician compensation leads to increased productivity, as expected (elasticity = .07, p < .05). The productivity effects of compensation methods based on equal shares of group net income and incentive bonuses are significantly positive (p < .05) and smaller in magnitude. The group-level financial incentive does not appear to be significantly related to physician productivity. CONCLUSIONS: Individual physician incentives based on own production do increase physician productivity.     

Transmission of financial incentives to physicians by intermediary organizations in California

Many U.S. physicians participate in provider-sponsored organizations that act as their intermediaries in contracting with managed care plans, particularly where capitation contracts are used. Examining a survey of 153 intermediary entities in California, we trace the cascade of financial incentives from health plans through physician organizations to primary care physicians. Although the physician organizations received the vast majority (84 percent) of their revenues through capitation contracts, most of the financial risk related to utilization and costs was retained at the group level. Capitation of primary care physicians was common in independent practice associations (IPAs), but payments typically were restricted to primary care services. Thirteen percent of medical groups and 19 percent of IPAs provided bonuses or withholds based on utilization or cost performance, which averaged 10 percent of base compensation.     

Creating a parsimonious typology of physician financial incentives

In order to create an empirically derived parsimonious typology of physician financial incentives that will be useful for future research, we used data from the nationally representative 2004–2005 Community Tracking Study Physician Survey (N = 6,628). Linear regression analyses informed by economic theory were used to identify the combinations of incentives associated with an overall financial incentive to expand services to individual patients. The approach was validated using two nonparametric methods (CART analysis and data mining techniques) and by examining the relationship between the resulting typology and other measures of physician behavior including hours worked, visit volume, and specialty-adjusted income. Of the 6,628 physicians surveyed, approximately 25% (1,605) reported an overall incentive to increase services and 75% (5,023) reported either neutral incentives or incentives to decrease services. Men, who were approximately 75% of respondents, were slightly more likely to report incentives to increase services (P < 0.05). There were no differences in reported incentives according to specialty. We created two typologies (one with eleven categories and the other with a collapsed set of six categories) based on combinations of variables measuring ownership, base compensation methods, and financial incentives. The percentage with an overall incentive to increase services ranges from 6% for employed physicians compensated via fixed salary to 36.7% for owners in low capitation environments with either individual or practice level productivity incentives. The criterion validity of the typology was established by examining the relationship with adjusted physician income, hours worked, and visit volume, which showed generally consistent relationships in the expected direction. A parsimonious typology consisting of six mutually exclusive groups reasonably captures the continuum of incentives to increase service delivery experienced by physicians.     

Are Physician Reimbursement Strategies Associated with Processes of Care and Patient Satisfaction for Patients with Diabetes in Managed Care?

Objective. To examine associations between physician reimbursement incentives and diabetes care processes and explore potential confounding with physician organizational model.
Data Sources. Primary data collected during 2000–2001 in 10 managed care plans.
Study Design. Multilevel logistic regressions were used to estimate associations between reimbursement incentives and process measures, including the receipt of dilated eye exams, foot exams, influenza immunizations, advice to take aspirin, and assessments of glycemic control, proteinuria, and lipid profile. Reimbursement measures included the proportions of compensation received from salary, capitation, fee-for-service (FFS), and performance-based payment; the performance-based payment criteria used; and interactions of these criteria with the strength of the performance-based payment incentive.
Data Collection. Patient, provider group, and health plan surveys and medical record reviews were conducted for 6,194 patients with diabetes.
Principal Findings. Without controlling for physician organizational model, care processes were better when physician compensation was based primarily on direct salary rather than FFS reimbursement (four of seven processes were better, with relative risks ranging from 1.13 to 1.23) or capitation (six were better, with relative risks from 1.06 to 1.36); and when quality/satisfaction scores influenced physician compensation (three were better, with relative risks from 1.17 to 1.26). However, these associations were substantially confounded by organizational model.
Conclusions. Physician reimbursement strategies are associated with diabetes care processes, although their independent contributions are difficult to assess, due to high correlation with physician organizational model. Regardless of causality, a group's use of quality/satisfaction scores to determine physician compensation may indicate delivery of high-quality diabetes care.     

Organizational and Market Influences on Physician Performance on Patient Experience Measures

Objective. To examine the extent to which medical group and market factors are related to individual primary care physician (PCP) performance on patient experience measures. Data Sources. This study employs Clinician and Group CAHPS survey data (n=105,663) from 2,099 adult PCPs belonging to 34 diverse medical groups across California. Medical group directors were interviewed to assess the magnitude and nature of financial incentives directed at individual physicians and the adoption of patient experience improvement strategies. Primary care services area (PCSA) data were used to characterize the market environment of physician practices. Study Design. We used multilevel models to estimate the relationship between medical group and market factors and physician performance on each Clinician and Group CAHPS measure. Models statistically controlled for respondent characteristics and accounted for the clustering of respondents within physicians, physicians within medical groups, and medical groups within PCSAs using random effects. Principal Findings. Compared with physicians belonging to independent practice associations, physicians belonging to integrated medical groups had better performance on the communication ( p=.007) and care coordination ( p=.03) measures. Physicians belonging to medical groups with greater numbers of PCPs had better performance on all measures. The use of patient experience improvement strategies was not associated with performance. Greater emphasis on productivity and efficiency criteria in individual physician financial incentive formulae was associated with worse access to care ( p=.04). Physicians located in PCSAs with higher area‐level deprivation had worse performance on the access to care ( p=.04) and care coordination ( p<.001) measures. Conclusions. Physicians from integrated medical groups and groups with greater numbers of PCPs performed better on several patient experience measures, suggesting that organized care processes adopted by these groups may enhance patients' experiences. Physicians practicing in markets with high concentrations of vulnerable populations may be disadvantaged by constraints that affect performance. Future studies should clarify the extent to which performance deficits associated with area‐level deprivation are modifiable.     

Managing patient care cost in Minnesota medical group practices

This study was designed to identify the mechanisms employed by medical group practices in Minnesota to control the costs of care. Several studies have found that health care costs in Minnesota are lower than in many other states, but no one knows why. We explore this issue by analyzing the factors in Minnesota medical group practices considered to be essential to cost control and, to the degree possible, by comparing those data with national data. It appears that Minnesota practices are somewhat less efficient than national averages--as measured by relative value units or procedures per full-time equivalent physicians--but that Minnesota practices have lower per-member, per-month (PMPM) costs. It also appears that the lower PMPM costs result from structural factors such as electronic information systems, physician profiling, and use of clinical guidelines rather than from financial incentive systems. This article also reports physician compensation and revenue trends, most notably that there appears to be a shift away from fixed salaries and toward productivity-based compensation; and there is a shift away from capitation payments and toward modified fee-for-service payments.     

Effects of changes in incomes and practice circumstances on physicians' decisions to treat charity and Medicaid patients

CONTEXT: The decline over the past decade in the percentage of physicians providing care to charity and Medicaid patients has been attributed to both financial pressure and the changing practice environment. Policymakers should be concerned about these trends, since private physicians are a major source of medical care for low-income persons. This study examines how changes in physicians' practice income, ownership, and size affect their decisions to stop or start treating charity care and Medicaid patients. METHODS: This study uses panel data from four rounds of the Community Tracking Study Physician Survey. The dependent variables are the likelihood of physicians' (1) dropping charity care, (2) starting to provide charity care, (3) no longer accepting new Medicaid patients, and (4) starting to accept new Medicaid patients. The primary independent variables are changes in physicians' practice income, ownership, and practice type/size. Multivariate analysis controls for the effects of other physician practice characteristics, health policies, and health care market factors. FINDINGS: A decline in physicians' income increased the likelihood that a physician would stop accepting new Medicaid patients but had no effect on his or her decision to provide charity care. Those physicians who switched from being owners to employees or from small to larger practices were more likely to drop charity care and to start accepting Medicaid patients, and physicians who made the opposite practice changes did the reverse. CONCLUSIONS: Changes in their income and practice arrangements make physicians less willing to accept Medicaid and uninsured patients. Moreover, physicians moving into different practice arrangements treat charity and Medicaid patients as substitutes rather than as similar types of patients. To reverse these trends, policymakers should consider raising Medicaid reimbursement rates and subsidizing organizations that encourage private physicians to provide charity care.