Operating on commission: analyzing how physician financial incentives affect surgery rates

Abstract

This paper employs a nationally representative, household-based dataset in order to test how the compensation method of both the specialists and the primary care providers affects surgery rates. After controlling for adverse selection, I find that when specialists are paid through a fee-for-system scheme rather than on a capitation basis, surgery rates increase 78%. The impact of primary care physician compensation on surgery rates depends on whether or not referral restrictions are present.

Deficit Reduction Act: Effects on Utilization of Noninvasive Musculoskeletal Imaging

“…This finding for nonradiologists is supported by the literature on physician response to payment changesnamely, that lower payments decrease utilization or slow utilization growth (17)(18)(19))-and the literature on selfreferral, which shows that nonradiologists doing their own imaging order much more imaging procedures than nonradiologists in the same specialties who see comparable patients but who send their patients to radiologists for imaging (20,21). Also, there is recent evidence that imaging volume by nonradiologists markedly increases when they begin to do their own imaging (15), and that imaging by nonradiologists infrequently provides the purported benefits to patients of speedier recovery or the convenience of onestop service (22,23).…”

How sensitive is physician performance to alternative compensation schedules? Evidence from a large network of primary care clinics

“…In contrast, in a study of 7352 Canadian family physicians, Devlin and Sarma (2008) found that salaried physicians report 58% fewer patient visits per week than physicians paid primarily via FFS. Similarly, Shafrin (2009) found that individuals whose health plan paid their primary care physician on a FFS basis reported 8.6% more surgeries than comparable individuals whose health plan paid their physician on a capitated basis. While drawn from settings that are representative of the current organization of health care delivery, the self-reported and cross-sectional nature of the data used in these studies renders them vulnerable to survey and item nonresponse bias as well as selection bias at the patient and the provider levels (Armour et al, 2001).…”

Custom-Made Healthcare – An Experimental Investigation

“…While there exists an extensive theoretical and empirical literature on the effects of financial incentives on physician behavior (e.g., Carlson et al 2011;Dumont et al 2008;Gosden et al 2001;Gruber & Owings 1996;McGuire 2000;McGuire & Pauly 1991;Mitchell et al 2002;Newhouse 1996;Newhouse & Marquis 1978;Shafrin 2010), the related research based on the method of experimental economics is rather limited.…”