Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health?
Jeffrey Clemens, Joshua D. Gottlieb
American Economic Review · 2014 · Volume 104 · Issue 4
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
Analysis of Health Care Markets, Health: Government Policy, Regulation, Public Health, Professional Labor Markets, Occupational Licensing, Management of Technological Innovation and R&D
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