Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health?
- (pp. 1320-49)
AbstractWe investigate whether physicians' financial incentives influence health care supply, technology diffusion, and resulting patient outcomes. In 1997, Medicare consolidated the geographic regions across which it adjusts physician payments, generating area-specific price shocks. Areas with higher payment shocks experience significant increases in health care supply. On average, a 2 percent increase in payment rates leads to a 3 percent increase in care provision. Elective procedures such as cataract surgery respond much more strongly than less discretionary services. Non-radiologists expand their provision of MRIs, suggesting effects on technology adoption. We estimate economically small health impacts, albeit with limited precision.
Citation2014. "Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health?" American Economic Review, 104 (4): 1320-49. DOI: 10.1257/aer.104.4.1320
- I11 Analysis of Health Care Markets
- I18 Health: Government Policy; Regulation; Public Health
- J44 Professional Labor Markets; Occupational Licensing
- O32 Management of Technological Innovation and R&D