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PHYSICIAN INCENTIVES IN MANAGED CARE ORGANIZATIONS Medical Practice Norms and the Quality of Care

In the current health care environment, it is hard to remember that health maintenance organizations (HMOs) were once viewed as a force for progress in U.S. medicine. By structuring contracts that included incentives for physicians and other providers to control unnecessary medical expenditures, HMOs offered the prospect of more cost-efficient medical care. As new technology made health care more effective, however, public concern grew that HMOs would lead a “race to the bottom” in which competitive pressures to reduce costs would drive care quality down to minimally acceptable levels.