Volume 75 Number 3, 1997

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Physicain Responses to Global Physician Expenditure Budgets in Canada: A Common Property Perspective

Jeremiah Hurley, Johnathan Lomas and Laurie J. Goldsmith

Global expenditure budgets in the fee-for-service physician sector create management problems for both funders and physicians. Global expenditure cap policies must be designed, and appropriate institutional structures created, to mitigate perverse utilization incentives, manage collective utilization, and diffuse the internal professional and the funder-profession tensions created by a capped budget. Two Canadian provinces that adopted different approaches to the design of their physician expenditure cap policies experienced different outcomes in utilization growth. The outcomes, however, are the opposite to what one would predict based on an analysis of the incentive structures embodied in the two provincesí policies. An analytic framework developed for the study of common-property resources is applied to the differing physician responses to global budgets across the two provinces. The insights offered by this framework can guide policy design for global physician budgets, and they indicate the critical importance of physician acceptance

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