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Does Physician Compensation Impact Procedure Choice and Patient Health?

Author

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  • Diane Alexander

    (Princeton University)

Abstract

I find that compensation structure impacts a doctor?s decision to perform a Cesarean section (C-section). Using Medicaid reimbursement and vital statistics data, I find that fee-for-service doctors respond to an increase in the relative reimbursement for C-sections by increasing their use of the procedure. These incentives are not passed through to salaried doctors ? their Csection use remains constant at the same lower rate as fee-for-service doctors who are paid the same for both procedures. For fee-for-service doctors who face pay differentials, however, the increase in C-section use due to increases in the pay difference is associated with fewer infant deaths. Thus, this paper demonstrates the difficulty in lowering procedure use while holding patient health constant; from a policy perspective, the consequences for patients of changing physician behavior must always be kept in mind.

Suggested Citation

  • Diane Alexander, 2013. "Does Physician Compensation Impact Procedure Choice and Patient Health?," Working Papers 1475, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
  • Handle: RePEc:pri:cheawb:jul2013
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    Citations

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    Cited by:

    1. Gabriel Facchini, 2022. "Forgetting‐by‐not‐doing: The case of surgeons and cesarean sections," Health Economics, John Wiley & Sons, Ltd., vol. 31(3), pages 481-495, March.
    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. Erin Johnson & M. Marit Rehavi & David C. Chan, Jr & Daniela Carusi, 2016. "A Doctor Will See You Now: Physician-Patient Relationships and Clinical Decisions," NBER Working Papers 22666, National Bureau of Economic Research, Inc.
    4. Paolo Berta & Gianmaria Martini & Massimiliano Piacenza & Gilberto Turati, 2020. "The strange case of less C‐sections: Hospital ownership, market concentration, and DRG‐tariff regulation," Health Economics, John Wiley & Sons, Ltd., vol. 29(S1), pages 30-46, October.
    5. Berta, P.; & Martini, G.; & Piacenza, M.; & Turati, G.;, 2019. "The strange case of appropriate C-sections:DRG-tariff regulation, hospital ownership, and market concentration," Health, Econometrics and Data Group (HEDG) Working Papers 19/02, HEDG, c/o Department of Economics, University of York.
    6. 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.
    7. Sara Allin & Michael Baker & Maripier Isabelle & Mark Stabile, 2015. "Accounting for the Rise in C-sections: Evidence from Population Level Data," NBER Working Papers 21022, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Medicaid; health costs; c-section; cesarean section; births; reimbursement; compensation; doctors;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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