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Competition and physician-enabled demand: The role of managed care

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  • Fang, Hai
  • Rizzo, John A.
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    Abstract

    Recent organizational changes in the health care sector promote greater patient participation in their treatment decisions. How physicians respond to patient-initiated requests for treatment is an issue of considerable policy interest. To study this phenomenon, we introduce the notion of physician-enabled demand and examine empirically whether this behavior responds to competitive pressures in the market and financial incentives associated with different physician payment mechanisms. We find that physician-enabled demand increases with more competition under fee-for-service reimbursement, but decreases with greater competition under managed care. This asymmetric response is quite consistent with our conceptual framework and at odds with alternative interpretations.

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    File URL: http://www.sciencedirect.com/science/article/B6V8F-4WBT422-2/2/0957230197ef9f51fa80e34041a135c5
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

    Volume (Year): 72 (2009)
    Issue (Month): 1 (October)
    Pages: 463-474

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    Handle: RePEc:eee:jeborg:v:72:y:2009:i:1:p:463-474

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    Web page: http://www.elsevier.com/locate/jebo

    Related research

    Keywords: Competition Physician-enabled demand Managed care;

    References

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    Cited by:
    1. Ching-to Albert MA & Tor Iversen, 2010. "Market conditions and general practitioners’ referrals," Boston University - Department of Economics - Working Papers Series WP2010-023, Boston University - Department of Economics.

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