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Physician agency and patient survival

Author

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  • Jacobson, Mireille G.
  • Chang, Tom Y.
  • Earle, Craig C.
  • Newhouse, Joseph P.

Abstract

We investigate the role of physician agency in determining health care supply and patient outcomes. We show that an increase in health care supply due to a change in private physician incentives has a theoretically ambiguous impact on patient welfare. The increase can reflect either induced demand for ineffective care or a reduction in prior rationing of effective care. Furthermore, physician market structure matters in determining the welfare effects of changes in private physician incentives. We then analyze a change to Medicare fees that caused physicians to increase their provision of chemotherapy. We find that this increase in treatment improved patient survival, extending median life expectancy for lung cancer patients by about 18%. Consistent with the model, we find that while the treatment response was larger in less concentrated markets, survival improvements were larger in more concentrated markets.

Suggested Citation

  • Jacobson, Mireille G. & Chang, Tom Y. & Earle, Craig C. & Newhouse, Joseph P., 2017. "Physician agency and patient survival," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 27-47.
    • Handle: RePEc:eee:jeborg:v:134:y:2017:i:c:p:27-47
    DOI: 10.1016/j.jebo.2016.11.011
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    References listed on IDEAS

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    Cited by:

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    3. Daniel Burkhard & Christian P. R. Schmid & Kaspar Wüthrich, 2019. "Financial incentives and physician prescription behavior: Evidence from dispensing regulations," Health Economics, John Wiley & Sons, Ltd., vol. 28(9), pages 1114-1129, September.
    4. Rudy Douven & Minke Remmerswaal & Tobias Vervliet, 2021. "Payment schemes and treatment responses after a demand shock in mental health care," Health Economics, John Wiley & Sons, Ltd., vol. 30(12), pages 2956-2973, December.
    5. Facchini, Gabriel, 2022. "Low staffing in the maternity ward: Keep calm and call the surgeon," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 370-394.
    6. Chen, Alice & Lakdawalla, Darius N., 2019. "Healing the poor: The influence of patient socioeconomic status on physician supply responses," Journal of Health Economics, Elsevier, vol. 64(C), pages 43-54.
    7. Rudy Douven & Minke Remmerswaal & Tobias Vervliet, 2019. "Treatment responses of mental health care providers after a demand shock," CPB Discussion Paper 404.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Rudy Douven & Minke Remmerswaal & Tobias Vervliet, 2019. "Treatment responses of mental health care providers after a demand shock," CPB Discussion Paper 404, CPB Netherlands Bureau for Economic Policy Analysis.

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