Final answer:
A primary care physician utilizes prospective utilization review to determine the necessity of a referral to a specialist, balancing resource allocation and patient needs, particularly within an HMO setting.
Step-by-step explanation:
A primary care physician decides whether or not to refer a patient to a specialist through a process called prospective utilization review. This is when a physician assesses the medical necessity and appropriateness of care before it is provided. In the context of a health maintenance organization (HMO), where providers are typically salaried and manage care for a large number of patients, the primary care physician plays a crucial role in coordinating patient care and deciding on referrals based on the optimal allocation of resources and the specific needs of the patients. This system aims to prevent over-utilization of healthcare services and ensure efficient management of patient care, which can be a balancing act between cost containment and quality patient care due to factors like adverse selection in insurance markets.