Physician Agency, Training, and Location

Ian McCarthy | Emory University

Variation in Health Care

Variation in Health Care

Consequences of physician agency:

  • Patients subjected to information frictions or financial incentives of physicians
  • The types of care people receive will depend on the physician
  • Potential variation in health care utilization and spending across and even within markets

Variation in Health Care

Consequences of physician agency:

  • Patients subjected to information frictions or financial incentives of physicians
  • The types of care people receive will depend on the physician
  • Potential variation in health care utilization and spending across and even within markets

Information frictions

  • Physicians don’t all have the exact same information
  • May depend on…
    • Learning over time (exposure to different patients and different treatment options)
    • Training and Location (peers)
    • Ownership structure (employee of hospital, large group, or self-employed)

Physician Training

Areas of “training”

  • Medical education
  • Choice of specialization
  • Personal biases (not really training, but important nonetheless)

Examples

  • Team effects and influence during residency (Chan, 2021)
  • Physicians following treatment patterns of advisors in residency (Pany, 2023)
  • PCP training associated with less healthcare utilization (Kravitz and Greenfield, 1995)

Physician Location and Practice

Peer effects

  • Peer effects pervasive in many areas
  • Do they apply to physicians in terms of their treatment decisions?
  • Physicians adopting practice patterns of peers in new practice (Molitor, 2018)

Molitor (2018)

  • The evolution of physician practice styles: evidence from cardiologist migration
  • Study cardiologist practice styles upon joining new practices (physician movers)
  • Practice environment can explain 60-80% of “supply-side” variation, at least in cardiology

Badinski, et al. (2023)

  • Geographic Variation in Healthcare Utilization: The Role of Physicians
  • New work effectively combining lots of prior approaches into one coherent study
  • Illustrates significant heterogeneities across types of physicians
  • For cardiologists:
    • Practice environment a major factor
    • Individual physician practice style less relevant
  • For PCPs:
    • Practice environment less critical
    • Individual physician practice style more important (explains around 20% of observed variation)

Who cares?

The problem

  • Significant variation in healthcare utilization across and within markets
  • Not explained by patient need or quality of care
  • Points to clear inefficiencies (can reduce utilization without sacrificing quality)

Sources of inefficiency

  • Learning and information
  • Practice environment and peer effects
  • Physician training and prior beliefs

Potential solutions

  • Information transparency (FDA, rating systems, etc.)
  • Opportunity for spillovers, but changing practice patterns is hard
    • Checklists, EHRs, etc.
    • Physicians don’t always like them