In recent years the integration of insurance companies and health service delivery organizations has led to radical change in the health care market. The attempt by these organizations to lower costs of health care by redistributing risk throughout the demand of the market has led to considerable changes for the suppliers in this market, the physicians. To understand the dynamics of this effect on physicians, we must, first, understand the specifics of exactly what types of reform have taken place. The emergence of Health Maintenance Organizations, HMOs, has led to a major part of the reform in the health care market. These organizations serve to provide patients(health care consumers) with health care insurance and the service of medical care. In these types of organizations, physicians are considered employees of the HMO and are paid by a borne plan. This is to say that for each patient cared for, a physician receives a fixed quantity of money. This is dramatically different from the traditional fee-for-service (FFS) plan where physicians receive payment based on the amount and difficulty of work performed on a given patient(Folland, 93.). From these statements about managed care and traditional health care, we can see the bodywork for a disincentive for a physician to supply labor under an HMO type situation. Thro!
             ugh an expectation of a salary decrease, a quota to treat more patients in the same amount of time used in traditional care, and an increased possibility of legal suits correlated to the way in which health care is administered in a managed care model, we can see a major disincentive for upcoming physicians to work.
             The changing of a price model in modern health care has considerably lowered the expected earnings of practicing physicians. Those physicians that participate in HMOs receive a flat rate on each patient treated. This is to say that an HMO participating physician treating a patient that obtains services fro...