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The Utility-Maximizing Self-Employed Physician

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  • James Thornton
  • B. Kelly Eakin

Abstract

We estimate a model of utility-maximizing physician behavior. Our model accounts for the interdependence of physician input, output, and work/leisure choices, and includes an endogenous virtual wage for physician own time in the medical practice. We find that solo practitioners respond to increases in marginal hourly earnings and nonpractice income by allocating less time to medical practice activities. Our results also suggest that fee reductions induce the substitution of physician own time for auxiliaries, and the net effect of this adjustment is reduced patient loads and a decrease in supply from the existing stock of solo practitioners.

Suggested Citation

  • James Thornton & B. Kelly Eakin, 1997. "The Utility-Maximizing Self-Employed Physician," Journal of Human Resources, University of Wisconsin Press, vol. 32(1), pages 98-128.
    • Handle: RePEc:uwp:jhriss:v:32:y:1997:i:1:p:98-128
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    Cited by:

    1. Rudoler, David & Laporte, Audrey & Barnsley, Janet & Glazier, Richard H. & Deber, Raisa B., 2015. "Paying for primary care: A cross-sectional analysis of cost and morbidity distributions across primary care payment models in Ontario Canada," Social Science & Medicine, Elsevier, vol. 124(C), pages 18-28.
    2. Barbara Broadway & Guyonne Kalb & Jinhu Li & Anthony Scott, 2017. "Do Financial Incentives Influence GPs' Decisions to Do After‐hours Work? A Discrete Choice Labour Supply Model," Health Economics, John Wiley & Sons, Ltd., vol. 26(12), pages 52-66, December.
    3. Riise, Julie & Hole, Arne Risa & Gyrd-Hansen, Dorte & Skåtun, Diane, 2016. "GPs' implicit prioritization through clinical choices – evidence from three national health services," Journal of Health Economics, Elsevier, vol. 49(C), pages 169-183.
    4. McPake, Barbara & Russo, Giuliano & Tseng, Fu-Min, 2014. "How do dual practitioners divide their time? The cases of three African capital cities," Social Science & Medicine, Elsevier, vol. 122(C), pages 113-121.
    5. Calub, Renz Adrian, 2014. "Physician quality and payment schemes: A theoretical and empirical analysis," MPRA Paper 66038, University Library of Munich, Germany.
    6. Philippe CHONÉ & Elise COUDIN & Anne PLA, 2019. "Does the Provision of Physician Services Respond to Competition?," Working Papers 2019-20, Center for Research in Economics and Statistics.
    7. Chunzhou Mu & Shiko Maruyama, 2013. "Salient Gender Difference in the Wage Elasticity of General Practitioners' Labour Supply," Discussion Papers 2013-16, School of Economics, The University of New South Wales.
    8. Thomas F. Crossley & Jeremiah Hurley & Sung‐Hee Jeon, 2009. "Physician labour supply in Canada: a cohort analysis," Health Economics, John Wiley & Sons, Ltd., vol. 18(4), pages 437-456, April.
    9. Theodore Stefos & James Burgess & Jeffrey Cohen & Laura Lehner & Eileen Moran, 2012. "Dynamics of the mental health workforce: investigating the composition of physicians and other health providers," Health Care Management Science, Springer, vol. 15(4), pages 373-384, December.
    10. Thornton, James, 1997. "Are malpractice insurance premiums a tort signal that influence physician hours worked?," Economics Letters, Elsevier, vol. 55(3), pages 403-407, September.
    11. Sung-Hee Jeon & Jeremiah Hurley, 2010. "Physician Resource Planning in Canada: The Need for a Stronger Behavioural Foundation," Canadian Public Policy, University of Toronto Press, vol. 36(3), pages 359-375, September.
    12. Qin, Xuezheng & Li, Lixing & Hsieh, Chee-Ruey, 2013. "Too few doctors or too low wages? Labor supply of health care professionals in China," China Economic Review, Elsevier, vol. 24(C), pages 150-164.
    13. David Rudoler & Raisa Deber & Janet Barnsley & Richard H. Glazier & Adrian Rohit Dass & Audrey Laporte, 2015. "Paying for Primary Care: The Factors Associated with Physician Self‐selection into Payment Models," Health Economics, John Wiley & Sons, Ltd., vol. 24(9), pages 1229-1242, September.
    14. Isabelle Clerc & Olivier L’Haridon & Alain Paraponaris & Camelia Protopopescu & Bruno Ventelou, 2012. "Fee-for-service payments and consultation length in general practice: a work--leisure trade-off model for French GPs," Applied Economics, Taylor & Francis Journals, vol. 44(25), pages 3323-3337, September.
    15. Ahmad Reshad Osmani, 2021. "Conditional Cash Incentive and Use of Health Care Services: New Evidence from a Household Experiment," Journal of Family and Economic Issues, Springer, vol. 42(3), pages 518-532, September.
    16. Katherine Cuff & Jeremiath Hurley & Stuart Mestelman & Andrew Muller & Robert Nuscheler, 2007. "Public and Private Health Care Financing with Alternate Public Rationing," Department of Economics Working Papers 2007-07, McMaster University.
    17. Elise Coudin & Anne Pla & Anne‐Laure Samson, 2015. "GP responses to price regulation: evidence from a French nationwide reform," Health Economics, John Wiley & Sons, Ltd., vol. 24(9), pages 1118-1130, September.
    18. Toshiaki Iizuka & Yasutora Watanabe, 2016. "The Impact of Physician Supply on the Healthcare System: Evidence from Japan's New Residency Program," Health Economics, John Wiley & Sons, Ltd., vol. 25(11), pages 1433-1447, November.
    19. Choné, P. & Coudin, É. & Pla, A., 2014. "Are physician fees responsive to competition?," Health, Econometrics and Data Group (HEDG) Working Papers 14/20, HEDG, c/o Department of Economics, University of York.
    20. James F. Burgess, 2012. "Productivity Analysis in Health Care," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 34, Edward Elgar Publishing.
    21. Jayanta Bhattacharya, 2005. "Specialty Selection and Lifetime Returns to Specialization Within Medicine," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
    22. Sung-Hee Jeon & Jeremiah Hurley, 2007. "The Relationship Between Physician Hours of Work, Service Volume and Service Intensity," Canadian Public Policy, University of Toronto Press, vol. 33(s1), pages 17-30, January.

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