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Tradeoffs from Integrating Diagnosis and Treatment in Markets for Health Care

  • Christopher C. Afendulis
  • Daniel P. Kessler
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    To identify the important tradeoffs in consulting a single expert for both diagnosis and treatment, we examine the costs and health outcomes of elderly Medicare beneficiaries with coronary artery disease. We compare the empirical consequences of diagnosis by cardiologists who can provide surgical treatment – "integrated" cardiologists – to the consequences of diagnosis by a nonintegrated cardiologist. Diagnosis by an integrated cardiologist leads, on net, to higher health spending but similar health outcomes. The net effect contains three components: reduced spending and improved outcomes from better allocation of patients to surgical treatment options; increased spending conditional on treatment option; and worse outcomes from poorer provision of nonsurgical care. (JEL I11, I18)

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.97.3.1013
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    File URL: http://www.aeaweb.org/aer/data/june07/20050655_data.zip
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    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 97 (2007)
    Issue (Month): 3 (June)
    Pages: 1013-1020

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    Handle: RePEc:aea:aecrev:v:97:y:2007:i:3:p:1013-1020
    Note: DOI: 10.1257/aer.97.3.1013
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    1. Taylor, Curtis R, 1995. "The Economics of Breakdowns, Checkups, and Cures," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 53-74, February.
    2. Asher Wolinsky, 1991. "Competition in a Market for Informed Experts' Services," Discussion Papers 959, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    3. Hubbard, Thomas N, 2002. "How Do Consumers Motivate Experts? Reputational Incentives in an Auto Repair Market," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 437-68, October.
    4. Victor R. Fuchs, 1978. "The Supply of Surgeons and the Demand for Operations," NBER Working Papers 0236, National Bureau of Economic Research, Inc.
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