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Imaging Room and Beyond: The Underlying Economics Behind Physicians’ Test-Ordering Behavior in Outpatient Services

Author

Listed:
  • Tinglong Dai

    (Carey Business School, Johns Hopkins University, Baltimore, Maryland 21202)

  • Mustafa Akan

    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

  • Sridhar Tayur

    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

Abstract

Motivated by a collaborative study with one of the most comprehensive ocular imaging programs in the United States, we investigate the underlying three-way trade-off among operational, clinical, and financial considerations in physicians’ decisions about ordering imaging tests. Laboratory tests may be processed in parallel and thus have a limited effect on patients’ waiting times; imaging tests, by contrast, require patient presence and thus directly influence patients’ waiting times. We use a strategic queueing framework to model a physician’s decision of ordering imaging tests and show that insurance coverage is the key driver of overtesting. Our further analysis reveals the following: (i) Whereas existing studies hold that lower out-of-pocket expenses lead to higher consumption levels, we refine this statement by showing the copayment and the coinsurance rate drive the consumption in different directions. Thus, simply expanding patient cost sharing is not the solution to overtesting. (ii) Setting a low reimbursement ceiling alone cannot eliminate overtesting. (iii) The joint effect of misdiagnosis concerns and insurance coverage can lead to both overtesting and undertesting even when no reimbursement ceiling exists. These and other results continue to hold under more general conditions and are therefore robust. We enrich our model along two extensions: one with patient heterogeneity in diagnostic precision, and the other with disparities in health insurance coverage. Our findings have implications for other healthcare settings with similar trade-offs.

Suggested Citation

  • Tinglong Dai & Mustafa Akan & Sridhar Tayur, 2017. "Imaging Room and Beyond: The Underlying Economics Behind Physicians’ Test-Ordering Behavior in Outpatient Services," Manufacturing & Service Operations Management, INFORMS, vol. 19(1), pages 99-113, February.
  • Handle: RePEc:inm:ormsom:v:19:y:2017:i:1:p:99-113
    DOI: 10.1287/msom.2016.0594
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    Citations

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    Cited by:

    1. Xuchuan Yuan & Tinglong Dai & Lucy Gongtao Chen & Srinagesh Gavirneni, 2021. "Co-Opetition in Service Clusters with Waiting-Area Entertainment," Manufacturing & Service Operations Management, INFORMS, vol. 23(1), pages 106-122, 1-2.
    2. Büşra Ergün‐Şahin & Evrim Didem Güneş & Ayşe Kocabıyıkoğlu & Ahmet Keskin, 2022. "How does workload affect test ordering behavior of physicians? An empirical investigation," Production and Operations Management, Production and Operations Management Society, vol. 31(6), pages 2664-2680, June.
    3. Tinglong Dai & Kelly Gleason & Chao‐Wei Hwang & Patricia Davidson, 2021. "Heart analytics: Analytical modeling of cardiovascular care," Naval Research Logistics (NRL), John Wiley & Sons, vol. 68(1), pages 30-43, February.
    4. Pengfei Guo & Christopher S. Tang & Yulan Wang & Ming Zhao, 2019. "The Impact of Reimbursement Policy on Social Welfare, Revisit Rate, and Waiting Time in a Public Healthcare System: Fee-for-Service Versus Bundled Payment," Service Science, INFORMS, vol. 21(1), pages 154-170, January.
    5. Tinglong Dai & Sridhar Tayur, 2020. "OM Forum—Healthcare Operations Management: A Snapshot of Emerging Research," Manufacturing & Service Operations Management, INFORMS, vol. 22(5), pages 869-887, September.
    6. Tinglong Dai & Ronghuo Zheng & Katia Sycara, 2020. "Jumping the Line, Charitably: Analysis and Remedy of Donor-Priority Rule," Management Science, INFORMS, vol. 66(2), pages 622-641, February.
    7. Fainman, Emily Zhu & Kucukyazici, Beste, 2020. "Design of financial incentives and payment schemes in healthcare systems: A review," Socio-Economic Planning Sciences, Elsevier, vol. 72(C).
    8. Sun, Mingyao & Chai, Qiangfei & Ng, Chi To, 2023. "Managing the quality-speed tradeoff in blockchain-supported healthcare diagnostic services," Omega, Elsevier, vol. 120(C).
    9. Tinglong Dai & Shubhranshu Singh, 2020. "Conspicuous by Its Absence: Diagnostic Expert Testing Under Uncertainty," Marketing Science, INFORMS, vol. 39(3), pages 540-563, May.
    10. Fengfeng Huang & Pengfei Guo & Yulan Wang, 2022. "Modeling Patients' Illness Perception and Equilibrium Analysis of Their Doctor Shopping Behavior," Production and Operations Management, Production and Operations Management Society, vol. 31(3), pages 1216-1234, March.
    11. Sridhar Tayur, 2017. "OM Forum—An Essay on Operations Management," Manufacturing & Service Operations Management, INFORMS, vol. 19(4), pages 526-533, October.
    12. Robert J. Niewoehner & Bradley R. Staats, 2022. "Focusing Provider Attention: An Empirical Examination of Incentives and Feedback in Flu Vaccinations," Management Science, INFORMS, vol. 68(5), pages 3680-3702, May.

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