An Experiment on Referrals in Health Care
51 Pages Posted: 4 Nov 2016 Last revised: 9 Apr 2019
Date Written: April 7, 2017
How referral fees affect primary care physicians' behavior is empirically not well understood. We conduct a behavioral experiment on referral fees in which subjects take the role of physicians. We exogenously vary the level of referral fees from specialists to primary care physicians and study their impact on primary care physicians' diagnostic effort and referrals. In a separate experiment, we elicit physicians' altruism. Compared to our baseline without referral fees, the introduction of low referral fees significantly increases referrals of patients that need specialist treatment among barely altruistic primary care physicians. High referral fees significantly increase referrals across all primary care physicians. Interestingly, diagnostic effort is not significantly affected by referral fees. Efficiency increases in referral fees. These increases are mainly driven by changes in referral behavior of barely altruistic primary care physicians.
Keywords: Referrals, diagnosis, altruism, efficiency, laboratory experiment
JEL Classification: I11, D47, C91
Suggested Citation: Suggested Citation