Physicians’ Decisions to Treat Charity and Medicaid Patients Peter J. Cunningham, Ph.D. Jack Hadley, Ph.D. Presented at AcademyHealth Annual Research Meeting, Washington, D.C., June, 2008

More Physicians Not Providing Charity Care Source: CTS Physician Survey

More Physicians Not Accepting Medicaid Source: CTS Physician Survey

Changes in Practice Income and Organization Average Practice Income$180,930$170,850$168,122 % Employee % Solo or 2 Physician Practice % Medium or Large Group % Institution Source: CTS Physician Survey

Objectives Systematically examine effects of changes in practice income and organization on decisions to accept charity care, Medicaid patients Examine change from the perspective of individual physicians (instead of aggregate change)

Hypotheses – Practice Organization Physicians more likely to stop providing charity care Change from owner to employee status Change from small to large practice Physicians more likely to stop accepting Medicaid Change from employee to owner of practice Change from large to small practice

Hypotheses – Practice Income More ambiguous Theory of opportunity costs suggests physicians with higher income will be less willing to treat Medicaid, charity care However, higher income allows for greater ability to cost shift – more likely to treat charity, Medicaid Effects may differ for Medicaid, charity care Contingent on practice circumstances

CTS Physician Surveys Conducted in four rounds between 1996 – 2005 Rounds 2-4 combined sample from prior round and a fresh random sample (physicians interviewed in 2 consecutive rounds) 75 response rate for “reinterview” sample 2-3 year intervals between T1 and T2 observation Three separate panels with a total of 16,000 physicians

Dependent Variables Providing charity care in T1  No charity care in T2 Accepting Medicaid in T1  Not accepting in T2

Primary Independent Variables Baseline (T1) and change between T1 and T2 Owner vs. employee of practice Solo/small group practice vs. large group/institution Practice income

Other Control Variables Physician characteristics Physician practice characteristics Market characteristics Panel (1-3) 60 CTS communities (fixed-effects)

Analysis Logistic regression Three panel samples pooled Conditional samples Providing charity care in T1 Accepting Medicaid in T1 Adjusts for non-response bias, complex survey design

Change in Ownership % dropped charity care in T2 % dropped Medicaid in T2 All physicians in panel Change from owner to employee * Change from employee to owner * No change

Change in Practice Income % dropped charity care % dropped Medicaid > 20% decrease * 5-20% decrease14.0*10.1 No change (+/- 5%) % increase > 20% increase

Results of Logistic Regression Decrease in practice income associated with greater likelihood of dropping Medicaid patients Change from owner to employee More likely to drop charity care More likely to start accepting Medicaid patients Change from small to large practice More likely to drop charity care More likely to start accepting Medicaid patients

Conclusions Decrease in practice income contributing to decrease in Medicaid acceptance Changes in practice organization affecting decisions to accept Medicaid, charity care patients, but in opposite directions Decreasing physician willingness to provide charity care For Medicaid, offsetting effects of decrease in practice income Evidence that some physicians substituting Medicaid and charity care patients as they move into different practice arrangements

Policy Implications Decreased access to private practice physicians Increased pressure on core safety net providers For Medicaid, increase in fees is most effective way to increase physician access Subsidize local organizations that coordinate physician volunteer activities (Project Access)