Changing the nature of physician referral relationships in the US: the impact of managed care

Prior to the era of managed care in the US, health care delivery was managed by the professional activities of physicians. Managed care replaces management by profession with bureaucratic management structures and oversight, such as utilization review and gatekeeping (required referrals to specialty care). Practically, this means that physicians cannot use the professional relationships that typified practice under fee-for-service medicine, potentially changing not only what physicians do (e.g., order test or not, refer or not), but also how they do what they do. In this paper I look at just one of the changes brought about by managed care: contractual arrangements that require primary care providers to refer patients to a closed panel of specialist physicians. Through an in-depth case study of 45 primary care providers’ in the USA who face restricted specialist panels for their managed care patients, but not for their fee-for-service patients, I investigate how the practice of referring is changed by this requirement. First, I use interview data to describe primary care providers general preferences for referral consultants, as well as their views of the referral process and potential barriers in it. Next I present data from all referrals over a four-week period to analyze the extent of referral relationships in actual referrals. Finally, I conclude by discussing some ways that managed care entities can facilitate rather than diminish referral relationships among physicians.