What is the effect of physician compensation and risk-bearing arrangements on physician productivity and risk contracting? Researchers at the University of Washington conducted this study as a tie-in to related and recently completed HCFO project. The goal of the new study was to increase understanding of the impact of these differing compensation and risk bearing arrangements on physician productivity. Using data from the Medical Group Management Association's (MGMA) 1998 Compensation and Production Survey and their 1998 Practice Cost Survey (data for 1997), the researchers 1) added an additional year of MGMA data (for 1998) and used the models created for the ongoing study to analyze the effects of physician compensation on productivity; and 2) used InterStudy (or possibly other) data, to conduct a longitudinal analysis of the effects of changes in managed care penetration and other market factors on risk bearing by medical groups, group productivity, and approaches to physician compensation at the market level for 1995 through 1998. The objective of the study was to augment the ongoing study of the effects of physician compensation on physician productivity and to examine the effects of market-level variables on physicians’ productivity.