Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health?

SIEPR Discussion Paper No. 11-017

92 Pages Posted: 5 Jul 2012 Last revised: 1 Aug 2013

Jeffrey P. Clemens

University of California, San Diego (UCSD) - Department of Economics; NBER

Joshua D. Gottlieb

University of British Columbia (UBC) - Vancouver School of Economics; National Bureau of Economic Research (NBER)

Date Written: March 31, 2013

Abstract

We 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.

Keywords: Government Expenditures and Health, Health Production, Technological Diffusion, Procurement

JEL Classification: H51, I12, O33, H57

Suggested Citation

Clemens, Jeffrey P. and Gottlieb, Joshua D., Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health? (March 31, 2013). SIEPR Discussion Paper No. 11-017. Available at SSRN: https://ssrn.com/abstract=2101251 or http://dx.doi.org/10.2139/ssrn.2101251

Jeffrey P. Clemens

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

HOME PAGE: http://econweb.ucsd.edu/~j1clemens/

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Joshua D. Gottlieb (Contact Author)

University of British Columbia (UBC) - Vancouver School of Economics ( email )

6000 Iona Drive
Vancouver, British Columbia V6T 1L4
Canada
604-822-4121 (Phone)

HOME PAGE: http://economics.ubc.ca/gottlieb

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://papers.nber.org/authors/joshua_gottlieb

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