BACKGROUND: Although capitation has become an increasingly common method of payment for heath care, little is known about changes in physician satisfaction as they become more experienced working in a capitated environment.

METHODS: We surveyed the members of a physician hospital organization at an urban teaching hospital in the summers of 1996 and 1997. In 1996, fully capitated contracts covered <5% of patients under 65 years of age, but that figure increased to nearly 25% by 1997. We assessed physicians’ satisfaction with their practice, compared satisfaction under fee-for-service and capitated payment, and evaluated ethical issues related to capitation.

RESULTS: In 1996, we surveyed 587 physicians with direct patient care responsibilities, of whom 62% responded; 51% of 520 physicians responded in 1997. Overall satisfaction was 57% in 1996 and 71% in 1997. Among physicians who responded in both years, overall satisfaction was unchanged, but increases in satisfaction were noted for patient load (an increase of 0.5 points on a five-point scale, P <0.01), time to discuss patient needs (an increase of 0.3 points, P <0.01), and helpfulness of care coordination (an increase of 0.5 points, P = 0.02). In a direct comparison between fee-for-service and capitation, physicians were more satisfied with both methods of payment in 1997 than they were in 1996, but they were much more satisfied with fee-for-service in both years. For many individual indicators, the difference in satisfaction between fee-for-service and capitation increased between 1996 and 1997.

CONCLUSION: When introduced to capitation, physicians had strong negative perceptions about it. After a year’s experience, satisfaction with capitation improved, but perceived differences between capitation and fee-for-service grew even larger. Thus, physicians have serious concerns about capitation that may not be alleviated by experience with it.