The effect of physician remuneration on regional variation in hospital treatments

Abstract

We study medical practice variations for nine hospital treatments in the Netherlands. Our panel data estimations include various control factors and physician’s role to explain hospital treatments in about 3,000 Dutch zip code regions over the period 2006–2009. In particular, we exploit the physicians’ remuneration difference—fee-for-service (FFS) versus salary—to explain the effect of financial incentives on medical production. We find that utilization rates are higher in geographical areas where more patients are treated by physicians that are paid FFS. This effect is strong for supply sensitive treatments, such as cataracts and tonsillectomies, while we do not find an effect for non-supply sensitive treatments, such as hip fractures.

Unintended effects of reimbursement schedules in mental health care

“…Some of the first papers on this topic are Epstein et al (1986), Hickson et al (1987) and Stearns et al (1992). Recently, in the Netherlands, similar behavioral responses have also been reported since the introduction of regulated competition in the Dutch hospital market (Douven et al, 2015) and market for general practitioners (van Dijk et al, 2013). Less research has been done on case mix based funding in the mental health care market (Mason and Goddard, 2009).…”

Cost Variation in Diabetes Care across Dutch Care Groups?

“…For example, the Dutch pricing system for specialist care differs between hospitals; physicians are either self‐employed professionals and mainly paid via fee‐for‐services principles, or they receive a fixed salary from the hospital. Salaried physicians produce less volume than physicians reimbursed via fee‐for‐service (Douven, Mocking, and Mosca ). Next to the payment system of hospitals, the traveling distance between the patient and the hospital is also of importance for secondary health care use and costs.…”

OECD Health Statistics

“…Regulated competition in the hospital sector led to a concentrated market of general hospitals and proliferation of private clinics, often affi liated with hospitals and fi nanced only through Part B. 68 To limit the eff ect on expenditure of the volume increase resulting from the above changes, a global budget was set across the entire hospital sector, whereby if hospital expenditure increased by more than 2·5%, excess expenditure would be clawed back according to turnover.…”