Physicians Treating Physicians: Information and Incentives in Childbirth
M. Marit Rehavi
University of British Columbia; Canadian Institute for Advanced Research
Erin M. Johnson
Massachusetts Institute of Technology (MIT) - Sloan School of Management
NBER Working Paper No. w19242
This paper provides new evidence on the interaction between patient information and financial incentives in physician induced demand (PID). Using rich microdata on childbirth, we compare the treatment of physicians when they are patients with that of comparable non-physicians. We exploit a unique institutional feature of California to determine how inducement varies with obstetricians' financial incentives. Consistent with PID, physicians are almost 10 percent less likely to receive a C-section, with only a quarter of this effect attributable to differential sorting of patients to hospitals or obstetricians. Financial incentives have a large effect on C-section probabilities for non-physicians, but physician-patients are relatively unaffected. Physicians also have better health outcomes, suggesting overuse of C-sections adversely impacts patient health.
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Number of Pages in PDF File: 49
Date posted: July 19, 2013
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