Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health?
Jeffrey P. Clemens
University of California, San Diego (UCSD) - Department of Economics; NBER
Joshua D. Gottlieb
University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)
March 31, 2013
SIEPR Discussion Paper No. 11-017
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.
Number of Pages in PDF File: 92
Keywords: Government Expenditures and Health, Health Production, Technological Diffusion, Procurement
JEL Classification: H51, I12, O33, H57
Date posted: July 5, 2012 ; Last revised: August 1, 2013