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inf luencing physician payment methods by Lawrence Brown, a political scientist at the University of Michigan; Changing Physician Behavior: In Search of the Litt le Blue Button, ~ a discussion of non-economic inf luences on physician behavior by John Kimberly, a sociologist at the Wharton School of Management; Antitrust and Physician Payment,. an analysis of the implications of antitrust law for physician payment changes by Michael Pollard, a lawyer with the American Pharmaceutical Manufacturers Association; MA Third-Party Carrier Perspective on Physician Payment,. a discussion of the objectives and motivations of a private third party payer by Lawrence Morris, a senior vice president of Blue Cross and Blue Shield. An addit tonal paper was prepared by Sunny Yoder of the IOM stat f; it is titled physician Payment Methods: Forms and Levels of Physician Compensation. ~ The six papers, edited and revised, are included in this volume. Conference Agenda The conference agenda was designed to provide participants maximum opportunity for discussion. To set the stage for those discussions, four speakers representing a variety of perspectives brief ly stated their views in the opening session ~ see Conference Program, Appendix B) . Carl Schramm, an economist and di rector of the Johns Hopkins Center for Hospital Finance and Management, emphasized the urgency of physician payment issues in the current political and economic climate. Now is the time for a reexamination of payment policies, he stated, because those policies determine not only physicians' aggregate claims on the nation's wealth, but also the relative claims of the different specialties. For change to occur, he said, a new ~treaty. will be required between physicians and the other parties at interest: business, labor, private insurers, the federal government, patients, and organized consumers. The second speaker, Donald Blim, a practicing pediatrician from Kansas City, predicted that changes in physician payment are inevitable given the unrelenting growth in health care costs and an unacceptable inequity in earnings among specialties. He called upon the physician community to recognize its responsibility for problems of increasing hea 1th care costs and uti ligation, and to contribute to finding solutions. The third speaker, Richard Wilbur, physician and executive vice president of the Council of Medical Specialty Societies, took issue with the need for reform. Not only is the proportion of physicians —3—

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remunerated on a fee-for-service basis declining, he said, but fee levels are not a major influence on physician behavior. If any change is needed, Dr. Wilbur felt it should be in the direction of bringing the preferences of patients into the picture by rewarding the kinds of caring behavior they value. John D. Crozier of the Massachusetts Business Roundtable, the final speaker, said the impending financing crisis of the Medicare Trust Fund would be the catalyst for change in health care, including physician payment reform. The business community, in his view, can and should influence such change. According to him, we can expect business to become increasingly active in this arena through its involvement in health benefits design, utilization review, and consumer education. The remainder of the opening session was devoted to a general discussion of physician payment issues and conference objectives. This discussion is reflected in the following section on themes. On the second day of the conference, participants met in six workshop groups, each of which was to discuss the following set of questions: 0 What are appropriate objectives for methods of payment for physician services? How well do existing methods meet those objectives? How strong is the evidence? What new methods have been proposed or implemented and what is known of their effects? What mechanisms exist for modifying methods of payment today or might emerge in the future? How might the Institute of Medicine contribute to a reconsideration of physician payments by government, private purchasers of health care, physicians, and the public? Each group's chairman reported on his group's suggestions regarding possible IOM activities in the final plenary session. The conference concluded with a general discussion of whether and how the Institute might contribute to future discussions of physician payments. The conference afforded considerable opportunity for a wide-ranging discussion of problems, policy alternatives, and the needs of decision makers. Some of the work groups closely followed the suggested questions. Others did not. In the plenary sessions participants were free to touch on any issues they felt were relevant and important. No attempt was made to achieve consensus, nor were any policy recommendations formulated. Nevertheless, out of this rather free-flowing process emerged a number of clear themes. —4—