The effect of capitated and fee-for-service remuneration on physician decision making in gynecology

OBJECTIVE: To evaluate the variations in physician behavior leading to performance of gynecologic surgical procedures related to fee-for-service and capitation reimbursement systems. METHODS: This study compared the physician practice utilization of surgical services for fee-for-service and capitated contract reimbursement systems within a gynecology clinic. Attending gynecologists were reimbursed on a fee-for-service basis for all surgical services performed during a 6-month interval; subsequently, the same physicians were reimbursed on a capitated basis for 6 months and received a fixed payment for the clinical and surgical services provided. RESULTS: Three thousand seven hundred eighty consecutive outpatient gynecology visits were evaluated at the university gynecology clinic during 1994. We found a 15% overall decrease in the number of surgical procedures that were performed during the capitated reimbursement period compared with the fee-for-service time interval. The procedure most responsible for the reduction of surgical services was elective sterilization by laparoscopy, which underwent a statistically significant decrease (P < .01). CONCLUSION: The remuneration system in our review seemed to affect physician decision making for only the most elective procedures, whereas physicians maintained similar practice patterns for more severe conditions. Fee-for-service seems to encourage, whereas capitation seems to discourage, gynecologist from performing elective procedures.