Milbank Quarterly Article Examine Decline in Physician Charity Care

Switch from Practice Owner to Employee; Small to Large Practices Behind Drop in Charity Care

Media Advisory
March 20, 2008

Alwyn Cassil (202) 264-3484 or

WASHINGTON, DC—Changes in physicians’ income, practice ownership and practice size play a large role in their decisions to start or stop treating charity care and Medicaid patients, according to a study by the Center for Studying Health System Change (HSC) published in the March edition of the Milbank Quarterly.

The study, "Effects of Changes in Incomes and Practice Circumstances on Physicians’ Decisions to Treat Charity and Medicaid Patients," by HSC Senior Fellow Peter J. Cunningham, Ph.D., and Jack Hadley, Ph.D., of George Mason University, used panel data from four rounds of the nationally representative Community Tracking Study Physician Survey, 1996-97 through 2004-05. Earlier research by Cunningham showed that the proportion of U.S. physicians providing charity care declined significantly from 76.3 percent in 1996-7 to 68.2 percent in 2004-05.

The researchers examined the likelihood of physicians’ (1) dropping charity care, (2) starting to provide charity care, (3) no longer accepting new Medicaid patients, and (4) starting to accept new Medicaid patients.

A decline in income increased the likelihood that physicians would stop accepting new Medicaid patients but had no effect on their decision to provide charity care, according to the study. Physicians who switched from being owners to employees or from small to larger practices were more likely to drop charity care and to start accepting Medicaid patients. Physicians who made the opposite practice changes did the reverse.

The study concluded that changes in their income and practice arrangements make physicians less willing to accept Medicaid and uninsured patients. Moreover, physicians moving into different practice arrangements treat charity and Medicaid patients as substitutes rather than as similar types of patients. To reverse these trends, policymakers should consider raising Medicaid reimbursement rates and subsidizing organizations that encourage private physicians to provide charity care, according to the study.

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.