Previous studies evaluating workers' compensation care systems used retrospective controls. We performed a concurrent effectiveness study comparing a WC system that used visiting musculoskeletal specialists to assist primary care physicians with a typical discounted-fee, WC, managed-care system. In the new specialist-direct system, physicians could not profit from self-referral, but were paid 35% to 69% more per patient visit than doctors in the discounted-fee clinics. All claims filed by all employees of two hotels for 2 years were examined. Patients had self-selected either a specialist-direct or a discounted-fee clinic, and the entire cost of the claim was assigned to either system of care. Claim costs were 63% lower in the specialist-direct system (P < 0.001). Medical costs were 45% less (P < 0.014), and indemnity 85% less (P < 0.001), in this system. Claims were closed nearly 6 months faster in the specialist-direct system (P < 0.0001). Indemnity claims were more common in the discounted-fee system (P < 0.0001). Claimant and injury characteristics were not significantly different between the systems. This new care model is a cost-effective alternative to discounted WC managed care. Discounting the services of the primary treating physician may result only in cost-shifting, not cost-saving.