Effect of Financial Relationships on the Behaviors of Health Care Professionals: A Review of the Evidence

Abstract:     
This symposium paper explores the empirical evidence regarding the impact of financial relationships on the behavior of health care providers, specifically, physicians. We identify and synthesize peer-reviewed data addressing whether financial incentives are causally related to patient outcomes and health care costs. We cover three main areas where financial conflicts of interest arise and may have an observable relationship to health care practices: physicians’ roles as self-referrers, insurance reimbursement schemes that create incentives for certain clinical choices over others, and financial relationships between physicians and the drug and device industries. We found a well-developed scientific literature consisting of dozens of empirical studies, some that allow stronger causal inferences than others, but which altogether show that such financial conflicts of interests can, and sometimes do, impact physicians’ clinical decisions. Further research is warranted to document the causal relationship of such changes on health outcomes and the cost of care, but the current base of evidence is sufficiently robust to motivate policy reform.

Number of Pages in PDF File: 44

Keywords: incentives, conflicts of interest, medical decision making, bias, self-referral, industry, insurance, pay for performance

JEL Classification: I11

Accepted Paper Series