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Relative fees and the utilization of physicians' services in Canada

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  • Jeremiah Hurley
  • Roberta Labelle

Abstract

Study Question: The study objective is to estimate the relationship between changes in the relative fee physicians receive for a procedure and the utilization of the procedure. Data Sources/Study Setting: The study uses claims‐based, procedure‐specific, quarterly, aggregate utilization data for physicians in three specialties and four provinces in Canada for the period 1977–1989. Study Design: The unit of analysis is an individual procedure. Multi‐variate regression methods for cross‐sectional/times‐series data are applied to estimate the utilization‐fee relationship while controlling for supply‐ and demand‐side determinants of utilization. Principal Findings: There is no evidence of a strong, uniform utilization response among the 11 procedures analyzed. The results include a mixture of significant and non‐significant fee coefficients, and among the significant coefficients, a mixture of signs is observed. The results are consistent with utility‐maximizing behaviour by physicians rather than with profit‐maximizing behaviour. Conclusions: The fact that the direction and degree of the utilization effect associated with changing fees is procedure‐specific has direct implications for our ability to develop effective policies to modify physician behaviour that are based primarily on financial incentives, particularly those based on manipulating fees. The study also highlights the limitations of analyses based on aggregate data and suggests methodological approaches that have potential to overcome some of these limitations to fill gaps in our current knowledge.

Suggested Citation

  • Jeremiah Hurley & Roberta Labelle, 1995. "Relative fees and the utilization of physicians' services in Canada," Health Economics, John Wiley & Sons, Ltd., vol. 4(6), pages 419-438, November.
  • Handle: RePEc:wly:hlthec:v:4:y:1995:i:6:p:419-438
    DOI: 10.1002/hec.4730040601
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    Cited by:

    1. Scott, Anthony & Shiell, Alan, 1997. "Do fee descriptors influence treatment choices in general practice? A multilevel discrete choice model," Journal of Health Economics, Elsevier, vol. 16(3), pages 323-342, June.
    2. Brekke, Kurt R. & Holmås, Tor Helge & Monstad, Karin & Straume, Odd Rune, 2017. "Do treatment decisions depend on physicians' financial incentives?," Journal of Public Economics, Elsevier, vol. 155(C), pages 74-92.
    3. Alejandro Arrieta & Ariadna García-Prado, 2012. "Non-elective cesarean sections in public hospitals: hospital capacity constraints and doctor´s incentives," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 1212, Departamento de Economía - Universidad Pública de Navarra.
    4. Donald J Wright, 2004. "Insurance and monopoly power in a mixed private/public hospital system, CHERE Discussion Paper No 55," Discussion Papers 55, CHERE, University of Technology, Sydney.
    5. Thomas Rice, 2012. "The Physician as the Patient’s Agent," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 25, Edward Elgar Publishing.
    6. Fredrik Carlsen & Jostein Grytten & Irene Skau, 2003. "Financial incentives and the supply of laboratory tests," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 4(4), pages 279-285, December.
    7. Jeannette Brosig‐Koch & Burkhard Hehenkamp & Johanna Kokot, 2017. "The effects of competition on medical service provision," Health Economics, John Wiley & Sons, Ltd., vol. 26(S3), pages 6-20, December.
    8. Nibene H. Somé & Bernard Fortin & Bruce Shearer, 2024. "Measuring physicians' response to incentives: Labour supply, multitasking and earnings," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(2), pages 622-661, May.
    9. Ming Tai‐Seale & Thomas H. Rice & Sally C. Stearns, 1998. "Volume responses to medicare payment reductions with multiple payers: a test of the McGuire–Pauly model," Health Economics, John Wiley & Sons, Ltd., vol. 7(3), pages 199-219, May.
    10. Mireille Jacobson & Tom Y. Chang & Joseph P. Newhouse & Craig C. Earle, M.D., 2013. "Physician Agency and Competition: Evidence from a Major Change to Medicare Chemotherapy Reimbursement Policy," NBER Working Papers 19247, National Bureau of Economic Research, Inc.
    11. Hennig-Schmidt, Heike & Selten, Reinhard & Wiesen, Daniel, 2011. "How payment systems affect physicians' provision behaviour--An experimental investigation," Journal of Health Economics, Elsevier, vol. 30(4), pages 637-646, July.
    12. repec:nip:nipewp:07/2015 is not listed on IDEAS
    13. Gauri, Varun, 2001. "Are incentives everything? payment mechanisms for health care providers in developing countries," Policy Research Working Paper Series 2624, The World Bank.
    14. Devlin, Rose Anne & Sarma, Sisira, 2008. "Do physician remuneration schemes matter? The case of Canadian family physicians," Journal of Health Economics, Elsevier, vol. 27(5), pages 1168-1181, September.

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