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Exploring Variations in Healthcare Expenditures – What is the Role of Practice Styles?

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  • Alexander Ahammer
  • Thomas Schober

Abstract

Variations in the use of medical resources, both across and within geographical regions, have been widely documented. Whenever these variations cannot be explained by differences in patient needs or preferences, they may result in some individuals being over-treated, while others are under-treated, thus raising questions on the equity and efficiency of healthcare systems. One explanation for these variations is differences in medical practice styles; that is, physicians may develop their own treatment patterns based on their beliefs about the efficacy of medical interventions. We use a large administrative data set from Upper Austria to study the practice styles among primary care physicians. We decompose the use of healthcare services into patient characteristics, patient and physician fixed effects, and stochastic health shocks. Physician fixed effects are interpreted as a measure of practice styles, which are then related to observable physician characteristics and to attributes of the local healthcare sector.

Suggested Citation

  • Alexander Ahammer & Thomas Schober, 2017. "Exploring Variations in Healthcare Expenditures – What is the Role of Practice Styles?," Economics working papers 2017-05, Department of Economics, Johannes Kepler University Linz, Austria.
  • Handle: RePEc:jku:econwp:2017_05
    Note: English
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    File URL: http://www.econ.jku.at/papers/2017/wp1705.pdf
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    References listed on IDEAS

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    Cited by:

    1. Alexander Ahammer, 2016. "How Physicians Affect Patients’ Employment Outcomes Through Deciding on Sick Leave Durations," Economics working papers 2016-05, Department of Economics, Johannes Kepler University Linz, Austria.
    2. Alexander Ahammer & Ivan Zilic, 2017. "Do Financial Incentives Alter Physician Prescription Behavior? Evidence from Random Patient-GP Allocations," Working Papers 1701, The Institute of Economics, Zagreb.

    More about this item

    Keywords

    Health care expenditures; variation; practice styles; physician behavior;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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