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Title: Do Physicians' Financial Incentives Aff ect Medical Treatment and Patient Health?

Citation Type: Miscellaneous

Publication Year: 2012

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Abstract: We investigate whether physicians' financial incentives influence health care supply, technology diff usion, and resulting patient outcomes. In 1997, Medicare consolidated the geographic regions across which it adjusts payments forphysician services, generating area-speci fic price shocks that are plausibly exogenous with respect to health care demand. Areas with higher payment shocks experience significant increases in health care supply. On average, a 2 percent increase in payment rates leads to a 5 percent increase in care provision per patient. Elective procedures such as cataract surgery respond twice as strongly as less discretionary services like dialysis. Higher reimbursements also increase the pace of technology di ffusion, as non-radiologists acquire magnetic resonance imaging scanners more readily when prices increase. The magnitudes of our empirical findings imply that changing provider incentives explain up to one third of recent growth in spending on physician services. The incremental care has nosignifi cant impacts on mortality, hospitalizations, or heart attacks.

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Authors: Clemens, Jeff rey; Gottlieb, Joshua D.

Publisher: Harvard University

Data Collections: IPUMS USA

Topics: Health, Other

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