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Selective Hearing: Physician‐Ownership and Physicians’ Response to New Evidence

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  • David H. Howard
  • Guy David
  • Jason Hockenberry

Abstract

Physicians, acting in their role as experts, are often faced with situations where they must trade off personal and patient welfare. Physicians’ incentives vary based on the organizational environment in which they practice. We use the publication of a major clinical trial, which found that a common knee operation does not improve outcomes for patients with osteoarthritis, as an “informational shock” to gauge the impact of physicians’ agency relationships on treatment decisions. Using a 100% sample of procedures in Florida from 1998 to 2010, we find that publication of the trial reduced procedure volume, but the magnitude of the decline was smaller in physician‐owned surgery centers. Incentives affected physicians’ reactions to evidence.

Suggested Citation

  • David H. Howard & Guy David & Jason Hockenberry, 2017. "Selective Hearing: Physician‐Ownership and Physicians’ Response to New Evidence," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(1), pages 152-168, February.
    • Handle: RePEc:bla:jemstr:v:26:y:2017:i:1:p:152-168
    DOI: 10.1111/jems.12178
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    References listed on IDEAS

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    1. Toshiaki Iizuka, 2007. "Experts' agency problems: evidence from the prescription drug market in Japan," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 844-862, September.
    2. Barro, Jason R. & Huckman, Robert S. & Kessler, Daniel P., 2006. "The effects of cardiac specialty hospitals on the cost and quality of medical care," Journal of Health Economics, Elsevier, vol. 25(4), pages 702-721, July.
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    Cited by:

    1. Dubois, Pierre & Tunçel, Tuba, 2021. "Identifying the effects of scientific information and recommendations on physicians’ prescribing behavior," Journal of Health Economics, Elsevier, vol. 78(C).
    2. Wu, Bingxiao & David, Guy, 2022. "Information, relative skill, and technology abandonment," Journal of Health Economics, Elsevier, vol. 83(C).
    3. Meng-Chi Tang & Yi-Nong Wu, 2020. "Medical providers as double agents in a universal health care system: evidence from generic pharmaceutical adoption in Taiwan," Empirical Economics, Springer, vol. 59(1), pages 169-203, July.
    4. Laura Barrie Smith & Nihar R. Desai & Bryan Dowd & Alexander Everhart & Jeph Herrin & Lucas Higuera & Molly Moore Jeffery & Anupam B. Jena & Joseph S. Ross & Nilay D. Shah & Pinar Karaca-Mandic, 2020. "Patient and provider-level factors associated with changes in utilization of treatments in response to evidence on ineffectiveness or harm," International Journal of Health Economics and Management, Springer, vol. 20(3), pages 299-317, September.
    5. McKibbin, Rebecca, 2023. "The effect of RCTs on drug demand: Evidence from off-label cancer drugs," Journal of Health Economics, Elsevier, vol. 90(C).

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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