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Does a prepaid group practice deliver less care than the fee-for-service system when both serve comparable populations with comparable benefits? To answer this question, we randomly assigned a group of 1580 persons to receive care free of charge from either a fee-for-service physician of their choice (431 persons) or the Group Health Cooperative of Puget Sound (1149 persons). In addition, 733 prior enrollees of the Cooperative were studied as a control group.

The rate of hospital admissions in both groups at the Cooperative was about 40 per cent less than in the fee-for-service group (P<0.01), although ambulatory-visit rates were similar. The calculated expenditure rate for all services was about 25 per cent less in the two Cooperative groups (P<0.01 for the experimental group, P<0.05 for the control group). The number of preventive visits was higher in the prepaid groups, but this difference does not explain …