Organizational Economics and Physician Practices

43 Pages Posted: 22 Oct 2011 Last revised: 24 Oct 2011

See all articles by James B. Rebitzer

James B. Rebitzer

Boston University School of Management; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; Bard College - The Levy Economics Institute

Mark Votruba

Case Western Reserve University - Weatherhead School of Management

Date Written: October 2011

Abstract

Economists seeking to improve the efficiency of health care delivery frequently emphasize two issues: the fragmented structure of physician practices and poorly designed physician incentives. This paper analyzes these issues from the perspective of organizational economics. We begin with a brief overview of the structure of physician practices and observe that the long anticipated triumph of integrated care delivery has largely gone unrealized. We then analyze the special problems that fragmentation poses for the design of physician incentives. Organizational economics suggests some promising incentive strategies for this setting, but implementing these strategies is complicated by norms of autonomy in the medical profession and by other factors that inhibit effective integration between hospitals and physicians. Compounding these problems are patterns of medical specialization that complicate coordination among physicians. We conclude by considering the policy implications of our analysis - paying particular attention to proposed Accountable Care Organizations.

Suggested Citation

Rebitzer, James B. and Votruba, Mark, Organizational Economics and Physician Practices (October 2011). NBER Working Paper No. w17535. Available at SSRN: https://ssrn.com/abstract=1947190

James B. Rebitzer (Contact Author)

Boston University School of Management ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
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617 353 4605 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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IZA Institute of Labor Economics

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Bard College - The Levy Economics Institute

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United States

Mark Votruba

Case Western Reserve University - Weatherhead School of Management ( email )

10900 Euclid Ave.
Cleveland, OH 44106-7235
United States

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