Incentives Increase the Quality of Term Paper

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In this way, any concerns that could come up and be problematic will be avoided and the information contained in the study can be accepted as being reliable, valid, and unique.

As has been mentioned, limitations are too often overlooked in studies, and it is often impossible to find all of the limitations that are contained in a study and spell them out for all to see. However, that does not mean that the limitations that are noticed should be overlooked. As long as they are legitimate, the more limitations that are discussed in the research the more significant the research will be found to be, since any weaknesses that it might have will be noted and dealt with. It is for this reason that this particular section will detail the limitations that this study faces.

The main limitation of this study, other than the biases of the researcher, is that the study is largely subjective. Some may not see this as a limitation, but others will view it that way, and so it is important to discuss it and clear up any concerns early on. Objective studies are analytical and deal with facts and figures. Subjective studies deal more with perceptions and feelings, as well as thoughts and beliefs. While both are good ways of studying things, the kind of study that is being performed often dictates which way the study is conducted.

For this particular study, being able to be objective and provide facts and figures about the doctors, MCOs, and incentives would have been good, and could have provided some very significant data that would be important for future study. However, when dealing with concerns like this where individuals answer surveys, and where the literature review is also used as part of the collected data, there are often few facts and figures that can be used and relied on with any degree of certainty. This is why the study is subjective - not because there are no figures provided, but because the figures provided are based on answers to Yes/No questions, and these types of answers are largely subjective and based on the perceptions of the individual answering the survey. As has been mentioned, not all will see this as a limitation or a weakness of the study, but it is mentioned here so those that do view it that way will be aware of it.


The assumption of this research is to establish that there is a relationship between physician behavior and the monetary incentives used by MCOs. A further assumption is that physicians do see this as an ethical problem. If a physician limits the amount of hospital admissions, testing, and specialist referrals, that physician can financially gain, but at what cost to the patient? At what cost to the moral and ethical code of the physician? These questions are at the root of the problem, and must be considered and analyzed.


The main hypothesis of this research is that physicians do limit what they do for their patients when they see that they will achieve financial gain in this manner, and that this is detrimental to the care quality that these patients receive.

Managed care has had such a huge impact on both physicians and patients that many have not stopped to consider that, even though it may be financially better, the quality of patient care may not be the same as it was in the fee-for-service days, when the words 'managed care organization' were meaningless. The relationship between a physician and his or her patient is the foundation for modern medical ethics (LaPuma, 1996). To compromise that relationship to save a few dollars is terrifying, but it may be exactly what MCOs are doing. Clearly, there is a large ethical question here that necessitates further analysis.

In order to identify and consider the problem, various collected research articles have been examined, and can be found in the literature review that follows. Data sources under consideration came from the Kaiser Family Foundation, the AMA Council on Ethical and Judicial Affairs, and various academic journals. The summary of these relevant arguments, as well as the theoretical implications that could be found in them, allowed for some very important conclusions to be drawn about MCOs, physicians, and the ethical questions that they battle on a daily basis.

Chapter Two - Literature Review

In order to fully understand the literature being reviewed, it is important to understand the term 'care quality'. It will be defined in this section. Also discussed will be a comparison of the different types of payment plans that the MCOs use, such as capitation, fee-for-service, and salary. These will be considered in relationship to physician behavior. Additionally, the literature review will address the impact of care quality and payment on both physicians and patients so that the problem created by MCOs can be clearly seen and considered.

Without a clear definition of care quality, it is difficult to understand how financial incentives for physicians can translate to a loss of care for patients. Care quality has several definitions, depending on who is asked the question, but one of the best ones comes from Campbell (2000), who says that care quality is the ability to access effective care with the aim of maximizing health benefit in relation to necessity.

Care Quality Components

In Campbell's (2000) analysis, he suggests that there are two domains of quality, which he calls 'access' and 'effectiveness.' The most basic dimension of access to a health structure is physical or geographical access (Haynes, 1991). The patient and the physician have to be able to get together. If there is no physical meeting between physician and patient, there is no real way for the physician to assess the patient and that patient's health care needs. Without this assessment, the care quality that the doctor can provide to the patient is seriously limited, and could even prove to be more harmful than helpful if the physician misdiagnoses something or makes an inaccurate guess about what is wrong with the patient. Health care is really not the place for guesswork.

Effectiveness, on the other hand, is the extent to which care delivers its intended outcome or results in a desired process, in response to necessity (Campbell, 2000). This is the second part of quality. If access is not a problem, and the physician and patient get together, then the only thing left is to make sure that the treatment the physician prescribes is going to help the patient in the best way possible, with the least amount of discomfort. For treatment to be effective, the physician must know what is wrong with the patient, how to correct it, and what is the best treatment for that particular patient.

Not everyone responds the same way to treatment, and there may be a reason why a treatment that the physician would not normally use should be used on that patient. Managed Care Organizations can discourage this because the other treatment might be more expensive, for example, which would cause a problem for the physician -- does he do what is best for the patient, or does he get paid?

Payment Methods

There are several payment methods used by MCOs. The three main ones, which will be discussed further here, are capitation, salary, and fee-for-service. Capitation is a payment method where a physician is paid a specific sum of financial compensation for the ongoing care of an individual or group of individuals for a particular period of time. It is an agreed-upon estimate of the amount of financial compensation that will be required to provide that care (Berwick, 1996).

Under this type of payment method, physicians have a financial incentive to increase the number of patients that they treat, as long as the fee that they charge those patients is greater than the average cost of caring for the patients. In other words, the physician wants to treat a large number of basically healthy individuals, and only a very small number of unhealthy individuals. Anything else would not be cost-effective for the physician. This concern for the amount of financial compensation to be made off of each patient leads to a desire to reduce the average cost of care even further.

To reduce this cost, physicians will spend less time with patients and increase the number of specialty referrals that they make (Armour, 2001). They reduce the time they spend with a patient so that they can see more patients, and they refer patients to specialists so that they do not have to deal with a patient that is going to take up a lot of time. Once again, it simply is not cost effective for physicians working with MCOs to have very many unhealthy patients. Their goal is to…[continue]

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