Managing Patient Panels with Non‐Physician Providers

In recent years, the drive to contain health care costs has increased scrutiny of the traditional mode of delivering primary care where a patient is treated only by his primary care physician. In particular, greater reliance on non‐physician providers has been suggested as a lower‐cost alternative to the traditional set‐up. In this study, we consider a homogeneous patient panel treated by a solo primary care physician and develop a new model of patient health dynamics in which the health state for each patient on the physician’s panel follows Markovian transitions between “healthy,” “intermediate,” and “sick” states. In contrast to most currently used models, we treat patient demand for office visits as endogenous and managed by a physician via selection of a revisit frequency consistent with patient preferences. We model these preferences for the frequency of office visits using patients’ perception of their health status as well as the disutility associated with falling sick. At the center of our analysis are the interconnected decisions that a physician makes regarding the size of her patient panel and the patient revisit frequency. Our results quantify the overall impact of non‐physician providers on physician’s choices, physician’s expected daily compensation, and patients’ health. We characterize care settings, defined in terms of care effectiveness, characteristics of patient panel, as well as physician’s compensation scheme, that result in both parties, physician and patients, being better off as well as settings where at least one of the parties is worse off compared to the traditional approach.