MONITORING PHYSICIANS - A BARGAINING MODEL OF MEDICAL GROUP-PRACTICE

This paper challenges the proposition that large physician-owned groups will be inefficient because of failures to control opportunism. A bargaining model implies that even large partnerships will make efficient resource and monitoring decisions. In addition, opportunism has much the same payoff for employees and partners. The data show that most large medical practice organizations are physician owned. Empirical analyses of nine forms of monitoring by large groups generally show no clear link between monitoring and ownership. There is one exception. Physician-owned firms tend to base compensation on productivity, which may help explain the continued dominance of professional partnerships. © 1991.