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The Existence and Nature of Physician Agency: Evidence of Stinting from the British National Health Service

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  • Martin Chalkley
  • Colin Tilley

Abstract

The ability of physicians to make take‐it‐or‐leave‐it offers of treatment implies that even fully informed consumers of health care may receive treatments that they would not themselves choose. This paper examines both the extent and direction of this distortion away from patient choice—the physician agency effect—using a large patient‐level claims‐based data set for dental treatments under the British National Health Service. We find that an improvement in the outside opportunities of patients results in a small but significant increase in the level of service provided when dentists are remunerated on a fee‐for‐service basis. This is suggestive of stinting, wherein physician agency results in undertreatment relative to what patients would choose. We further find that the effect is increased when patients are fully insulated from the cost of their treatment.

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  • Martin Chalkley & Colin Tilley, 2005. "The Existence and Nature of Physician Agency: Evidence of Stinting from the British National Health Service," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(3), pages 647-664, September.
    • Handle: RePEc:bla:jemstr:v:14:y:2005:i:3:p:647-664
    DOI: 10.1111/j.1530-9134.2005.00077.x
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    References listed on IDEAS

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    1. Birch, Stephen, 1988. "The identification of supplier-inducement in a fixed price system of health care provision : The case of dentistry in the United Kingdom," Journal of Health Economics, Elsevier, vol. 7(2), pages 129-150, June.
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    Cited by:

    1. Martin Chalkley & Colin Tilley & Linda Young & Debbie Bonnetti & Jan Clarkson, 2008. "The Effect of Activity-Based Payment on Dentists’ Activity: Evidence from a Natural Experiment in the UK National Health Service," Dundee Discussion Papers in Economics 217, Economic Studies, University of Dundee.
    2. Wu, Bingxiao, 2019. "Physician agency in China: Evidence from a drug-percentage incentive scheme," Journal of Development Economics, Elsevier, vol. 140(C), pages 72-89.
    3. Manela Karunadasa & Katri K. Sieberg & Toni Tapani Kristian Jantunen, 2023. "Payment Systems, Supplier-Induced Demand, and Service Quality in Credence Goods: Results from a Laboratory Experiment," Games, MDPI, vol. 14(3), pages 1-31, May.
    4. Bonnetti, Debbie & Chalkley, Martin & Clarkson, Jan & Tilley, Colin & Young, Linda, 2008. "The Effect of Activity-Based Payment on Dentists’ Activity: Evidence from a Natural Experiment in the UK National Health Service," SIRE Discussion Papers 2008-45, Scottish Institute for Research in Economics (SIRE).
    5. Leonard, Kenneth L., 2008. "Is patient satisfaction sensitive to changes in the quality of care? An exploitation of the Hawthorne effect," Journal of Health Economics, Elsevier, vol. 27(2), pages 444-459, March.

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