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Do Treatment Decisions Depend on Physicians` Financial Incentives?

Author

Listed:
  • Kurt R. Brekke

    (Department of Economics, Norwegian School of Economics)

  • Tor Helge Holmäs

    (Uni Rokkan Centre; and Health Economics Bergen)

  • Karin Monstad

    (Uni Rokkan Centre; and Health Economics Bergen)

  • Odd Rune StraumeAuthor-Email: o.r.straume@eeg.uminho.p

    (Universidade do Minho - NIPE)

Abstract

We study whether and how physicians respond to nancial incentives, making use of detailed register data on the health-care services provided to patients by general practitioners (GPs) in Norway over a six-year period (2006-11). To identify GPs' treatment responses, we exploit that specialisation in general medicine entitles the GPs to a higher consultation fee, implying a change in total and relative fee payments. To control for demand and supply factors related to becoming a specialist, we estimate a GP fixed effect model focusing on anarrow time window around the date of specialist certi cation. Our results show a sharp response by the GPs immediately after obtaining specialist certi fication and thus a higher consultation fee: the number of visits increase, while the treatment intensity (prolonged consultations, lab tests, medical procedures) decline. These fi ndings are consistent with theory model where (partly) profit motivated GPs face excess demand and income effects are sufficiently small. Finally, we find no evidence for adverse health effects (measured by emergency care centre visits) on patients due to the change in GPs' treatment behaviour after becoming a specialist.

Suggested Citation

  • Kurt R. Brekke & Tor Helge Holmäs & Karin Monstad & Odd Rune StraumeAuthor-Email: o.r.straume@eeg.uminho.p, 2015. "Do Treatment Decisions Depend on Physicians` Financial Incentives?," NIPE Working Papers 7/2015, NIPE - Universidade do Minho.
  • Handle: RePEc:nip:nipewp:7/2015
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    Cited by:

    1. Carol Propper & George Stoye & Max Warner, 2023. "The effects of pension reforms on physician labour supply: Evidence from the English NHS," IFS Working Papers W23/26, Institute for Fiscal Studies.
    2. 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.
    3. Kurt R. Brekke & Tor Helge Holmäs & Karin Monstad & Odd Rune Straume, 2018. "How does the type of remuneration affect physician behaviour? Fixed salary versus fee-for-service," NIPE Working Papers 09/2018, NIPE - Universidade do Minho.
    4. Brekke, Kurt R. & Holmås, Tor Helge & Monstad, Karin & Straume, Odd Rune, 2019. "Competition and physician behaviour: Does the competitive environment affect the propensity to issue sickness certificates?," Journal of Health Economics, Elsevier, vol. 66(C), pages 117-135.
    5. Devlin, Aileen M. & McCormack, Grace, 2023. "Physician responses to Medicare reimbursement rates," Journal of Health Economics, Elsevier, vol. 92(C).
    6. Véra Zabrodina & Mark Dusheiko & Karine Moschetti, 2020. "A moneymaking scan: Dual reimbursement systems and supplier‐induced demand for diagnostic imaging," Health Economics, John Wiley & Sons, Ltd., vol. 29(12), pages 1566-1585, December.
    7. Jamie O’Halloran & Anne Sophie Oxholm & Line Bjørnskov Pedersen & Dorte Gyrd-Hansen, 2021. "Home sweet home: GPs’ response to an increase in the fee size for home visits," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(6), pages 977-989, August.
    8. Zhang, Xuan, 2022. "The effects of physician retirement on patient outcomes: Anticipation and disruption," Journal of Public Economics, Elsevier, vol. 207(C).
    9. Kurt R. Brekke & Tor Helge Holmås & Karin Monstad & Odd Rune Straume, 2018. "Socio‐economic status and physicians' treatment decisions," Health Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 77-89, March.
    10. David Bardey & Philippe de Donder & Vera Zaporozhets, 2024. "Economic Incentives to Develop and to Use Diagnostic Tests - A Literature Review," Working Papers hal-04472497, HAL.
    11. Fengrong Liu & Jiayu Chen & Chaozhu Li & Fenghui Xu, 2023. "Cost Sharing and Cost Shifting Mechanisms under a per Diem Payment System in a County of China," IJERPH, MDPI, vol. 20(3), pages 1-12, January.
    12. Simon Reif & Lucas Hafner & Michael Seebauer, 2020. "Physician Behavior under Prospective Payment Schemes—Evidence from Artefactual Field and Lab Experiments," IJERPH, MDPI, vol. 17(15), pages 1-37, July.
    13. Rong Fu & Yichen Shen & Haruko Noguchi, 2021. "The best of both worlds? The economic effects of a hybrid fee‐for‐service and prospective payment reimbursement system," Health Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 505-524, March.
    14. Calvin Ackley & Abe Dunn & Eli Liebman & Adam Hale Shapiro, 2024. "Are Medicaid and Medicare Patients Treated Equally?," Working Paper Series 2024-14, Federal Reserve Bank of San Francisco.
    15. Gabriel A. Facchini Palma, 2020. "Low Staffing in the Maternity Ward: Keep Calm and Call the Surgeon," Working Papers wpdea2009, Department of Applied Economics at Universitat Autonoma of Barcelona.
    16. Huitfeldt, Ingrid, 2021. "Hospital reimbursement and capacity constraints: Evidence from orthopedic surgeries," Health Policy, Elsevier, vol. 125(6), pages 732-738.
    17. March, Raymond J. & Geloso, Vincent, 2020. "Gordon Tullock meets Phineas Gage: The political economy of lobotomies in the United States," Research Policy, Elsevier, vol. 49(1).

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    More about this item

    Keywords

    General Practitioners; Fee-for-service; Profit-motivation;
    All these keywords.

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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