HMO Penetration and the Geographic Mobility of Practicing Physicians

Published in: Journal of Health Economics, v. 19, no. 5, 2000, p. 793-809

Posted on RAND.org on December 31, 1999

by Daniel Polsky, Phillip R. Kletke, Gregory D. Wozniak, Jose J. Escarce

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In this study, the authors assessed the influence of changes in health maintenance organization (HMO) penetration on the probability that established patient care physicians relocated their practices or left patient care altogether. For physicians who relocated their practices, we also assessed the impact of HMO penetration on their destination choices. The authors found that larger increases in HMO penetration decreased the probability that medical/surgical specialists in early career stayed in patient care in the same market, but had no impact on generalists, hospital-based specialists, or mid career medical/surgical specialists. They also found that physicians who relocated their practices were much more likely to choose destination markets with the same level of HMO penetration or lower HMO penetration compared with their origin markets than they were to choose destination markets with higher HMO penetration. The largely negligible impact of changes in HMO penetration on established physicians' decisions to relocate their practices or leave patient care is consistent with high relocation and switching costs. Relocating physicians' attraction to destination markets with the same level of HMO penetration as their origin markets suggests that, while physicians' styles of medical practice may adapt to changes in market conditions, learning new practice styles is costly.

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