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Organizational Economics and Physician Practices

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  • James B. Rebitzer
  • Mark E. Votruba

Abstract

Economists seeking to improve the efficiency of health care delivery frequently emphasize two issues: the fragmented structure of physician practices and poorly designed physician incentives. This paper analyzes these issues from the perspective of organizational economics. We begin with a brief overview of the structure of physician practices and observe that the long anticipated triumph of integrated care delivery has largely gone unrealized. We then analyze the special problems that fragmentation poses for the design of physician incentives. Organizational economics suggests some promising incentive strategies for this setting, but implementing these strategies is complicated by norms of autonomy in the medical profession and by other factors that inhibit effective integration between hospitals and physicians. Compounding these problems are patterns of medical specialization that complicate coordination among physicians. We conclude by considering the policy implications of our analysis - paying particular attention to proposed Accountable Care Organizations.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17535.

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Date of creation: Oct 2011
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Publication status: published as Rebitzer, J and Votruba, M. “Organizational Economics and Physician Practices”, Encyclopedia of Health Economics, Elsevier Limited (accepted February 2013, to be published 2014)
Handle: RePEc:nbr:nberwo:17535

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  1. Kevin Lang & Sumon Majumdar, 2004. "The Pricing Of Job Characteristics When Markets Do Not Clear: Theory And Policy Implications," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(4), pages 1111-1128, November.
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Cited by:
  1. Brigham Frandsen & James B. Rebitzer, 2014. "Structuring Incentives Within Organizations: The Case of Accountable Care Organizations," NBER Working Papers 20034, National Bureau of Economic Research, Inc.

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