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Physician Beliefs and Patient Preferences: A New Look at Regional Variation in Health Care Spending

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  • David Cutler
  • Jonathan Skinner
  • Ariel Dora Stern
  • David Wennberg

Abstract

There is considerable controversy about the causes of regional variations in healthcare expenditures. We use vignettes from patient and physician surveys, linked to Medicare expenditures at the level of the Hospital Referral Region, to test whether patient demand-side factors, or physician supply-side factors, explains regional variations in Medicare spending. We find patient demand is relatively unimportant in explaining variations. Physician organizational factors (such as peer effects) matter, but the single most important factor is physician beliefs about treatment: 36 percent of end-of-life spending, and 17 percent of U.S. health care spending, are associated with physician beliefs unsupported by clinical evidence.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19320.

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Date of creation: Aug 2013
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Handle: RePEc:nbr:nberwo:19320

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  1. Dranove, David & Wehner, Paul, 1994. "Physician-induced demand for childbirths," Journal of Health Economics, Elsevier, vol. 13(1), pages 61-73, March.
  2. Andrew Epstein & Sean Nicholson, 2005. "The Formation and Evolution of Physician Treatment Styles: An Application to Cesarean Sections," NBER Working Papers 11549, National Bureau of Economic Research, Inc.
  3. Jeffrey Clemens & Joshua D. Gottlieb, 2012. "Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health?," Discussion Papers, Stanford Institute for Economic Policy Research 11-017, Stanford Institute for Economic Policy Research.
  4. John Ameriks & Andrew Caplin & Steven Laufer & Stijn Van Nieuwerburgh, 2011. "The Joy of Giving or Assisted Living? Using Strategic Surveys to Separate Public Care Aversion from Bequest Motives," Journal of Finance, American Finance Association, vol. 66(2), pages 519-561, 04.
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  6. Amitabh Chandra & Douglas O. Staiger, 2007. "Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 115, pages 103-140.
  7. Doyle Jr., Joseph J. & Ewer, Steven M. & Wagner, Todd H., 2010. "Returns to physician human capital: Evidence from patients randomized to physician teams," Journal of Health Economics, Elsevier, vol. 29(6), pages 866-882, December.
  8. Anna A. Levine Taub & Anton Kolotilin & Robert S. Gibbons & Ernst R. Berndt, 2011. "The Diversity of Concentrated Prescribing Behavior: An Application to Antipsychotics," NBER Working Papers 16823, National Bureau of Economic Research, Inc.
  9. Mark Pauly, 1980. "Appendix to "Doctors and Their Workshops: Economic Models of Physician Behavior"," NBER Chapters, in: Doctors and Their Workshops: Economic Models of Physician Behavior, pages 119-122 National Bureau of Economic Research, Inc.
  10. Thomas G. McGuire & Mark V. Pauly, 1991. "Physician Response to Fee Changes with Multiple Payers," Papers, Boston University - Industry Studies Programme 0015, Boston University - Industry Studies Programme.
  11. Mark Pauly, 1980. "Doctors and Their Workshops: Economic Models of Physician Behavior," NBER Books, National Bureau of Economic Research, Inc, number paul80-1, Ekim.
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