That finding is part of a new RAND analysis of all physicians who finished their graduate medical education between 1989 and 1994 and who located in one of the 98 U.S. metropolitan areas with more than 500,000 population. The research project, headed by Dr. Jose J. Escarce of RAND, was conducted in collaboration with colleagues at the University of Pennsylvania and the American Medical Association. Their paper appears in the November issue of the journal Medical Care.

During the years 1989 to 1994, HMOs were gaining strength rapidly but, in geographic terms, spottily. Early in the period, new generalists were more likely to locate in metropolitan areas with high HMO penetration while new specialists' location choices were unassociated with the presence of HMOs. By the end of the period, HMO penetration had a negative effect on practice location for all new physicians. The effect was strongest for specialists.

Why is this happening? Escarce and his colleagues suggest answers that stem from the tight labor market for generalists relative to specialists. The generalists, capitalizing on the fact that they are in high demand throughout the country, are seeking to avoid HMOs and the cost control pressures they impose on primary care physicians. The specialists, finding few practice opportunities within HMOs and their catchment areas, are locating elsewhere out of necessity.

"If our findings regarding HMO penetration are generalizable to other community sizes, continued HMO growth in large metropolitan areas may result in more new physicians locating in smaller cities or nonmetropolitan areas," the authors observe.

This is the first systematic national study examining the effect of HMOs on young physicians' practice opportunities. Previous discussion has been confined to anecdotal evidence.

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. This research was supported by a grant from the Robert Wood Johnson Foundation under the Health Care Financing and Organization initiative.

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