Trust Me: Technical and Institutional Determinants of Health Maintenance Organizations Shifting Risk to Physicians.

This paper examines the factors that influence a Health Maintenance Organization (HMO) to shift risk to doctors through an incentive arrangement called capitation, where physicians are paid a fixed amount per patient for a period of time for any and all medical services required by the patient. Multispecialty-medical-group (Group) HMOs are more likely to shift risk than Independent Physician Associations (IPA) HMOs. Within IPA HMOs, larger enrollment per physician is positively associated with more risk shifting. We find that institutional factors signaling legitimacy play an important role in determining risk shifting. For-profit HMOs are less likely to shift risk, which we interpret as reflecting consumer distrust of for-profit HMOs. However, for-profit HMOs that are federally qualified, which we interpret as a signal of legitimacy, are more likely to shift risk. [ABSTRACT FROM AUTHOR]