Provider Choice and Utility Loss due to Selective Contracting in Rural and Urban Areas

Abstract

An econometric model estimated the disutility of traveling long distances for depression treatment, and simulations calculated the utility loss associated with selective contracting in rural and urban areas. A representative sample of depression patients (n = 106) and all practicing providers (n = 3,710) in Arkansas were identified and the distances between them were calculated. Using discrete choice analysis, patient preferences for provider type and travel distance were estimated. Simulations calculated the utility loss associated with alternative scenarios of selective contracting. Provider type and distance were significant predictors of provider choice. To equate the utility loss associated with selective contracting in rural and urban areas, a slightly higher proportion of rural physicians and a substantially higher proportion of rural mental health specialists must be contracted. To avoid further reductions in geographic access, managed care organizations should contract with a higher proportion of rural providers than urban providers.