The Effect of HMO Penetration on Physician Retirement

Published in: Health Services Research, v. 35, no. 5, pt. 3, Dec. 2000, p. 17-31

Posted on RAND.org on December 31, 1999

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

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OBJECTIVE: To examine the effect of HMO penetration on physician retirement. STUDY DESIGN: The authors linked together historical data from the Physician Masterfile of the American Medical Association for successive years to track changes in physicians' activity status between 1980 and 1997. They used a multivariate discrete-time survival model to examine how the probability of physician retirement was affected by the level of HMO penetration in the physician's market area, controlling for other physician and market characteristics. The study population included all active allopathic patient-care physician in the United States who reached age 55 between the years of 1980 and 1996. The main outcome measure was physician retirements as reported on the Physician Masterfile. PRINCIPAL FINDINGS: HMO penetration had a statistically significant positive effect on the retirement probabilities of generalists and medical/surgical specialists, but its effect on hospital-based specialists and psychiatrists was not significant. For generalists regression-adjusted retirement probabilities were roughly 13 percent greater in high-penetration markets (HMO penetration of 45 percent) than in low-penetration markets (HMO penetration of 5 percent). For medical/surgical specialists regression-adjusted retirement probabilities were roughly 17 percent greater in high-penetration markets than in low- penetration markets. CONCLUSIONS: The authors' findings suggest that many older physicians have found it preferable to retire rather than adapt their practices to an environment with a high degree of managed care penetration. Because the number of physicians entering the older age categories will increase rapidly over the next 20 years, the growth of managed care and other influences on physician retirement will play an increasingly important role in determining the size of the physician workforce.

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