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How Do Doctors Behave When Some (But Not All) of Their Patients are in Managed Care?

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  • Sherry Glied
  • Joshua Zivin

Abstract

Most physicians today treat a variety of patients within their practices and operate in markets where a variety of insurance arrangements co-exist. In this paper, we propose several theoretical explanations for physician treatment patterns when the patient population is heterogeneous at the practice and market level. Data from the 1993-1996 National Ambulatory Medical Care Survey (NAMCS) are used to test how practice-level and market-level HMO penetration affect treatment intensity. Practice composition has strong effects on treatment. HMO-dominated practices have shorter, but otherwise more treatment intensive visits than do other practices. Market characteristics are less important determinants of treatment. As HMO practice share rises, the differences between the treatment of non-HMO and HMO patients are attenuated. These results provide strong evidence for a model of physician behavior with fixed costs of effort in the form of visit duration. For tests ordered, medications prescribed, and return visits specified, the empirical evidence supports a model with marginal cost pricing for excess capacity. HMO and non-HMO treatment patterns are most distinct at the level of the practice, not the patient. HMO-dominated practices appear to use a practice style that is quite different from that used in other practices. These findings suggest that practices are likely to become more segregated over time.

Suggested Citation

  • Sherry Glied & Joshua Zivin, 2000. "How Do Doctors Behave When Some (But Not All) of Their Patients are in Managed Care?," NBER Working Papers 7907, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:7907
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    1. Glied, Sherry, 1998. "Payment Heterogeneity, Physician Practice, and Access to Care," American Economic Review, American Economic Association, vol. 88(2), pages 127-131, May.
    2. Thomas G. McGuire & Mark V. Pauly, 1991. "Physician Response to Fee Changes with Multiple Payers," Papers 0015, Boston University - Industry Studies Programme.
    3. Marsha Gold & Lyle Nelson & Timothy Lake & Robert Hurley & Robert Berenson, "undated". "Behind the Curve: A Critical Assessment of How Little is Known about Arrangements between Managed Care Plans and Physicians," Mathematica Policy Research Reports 2efe3ee37e15474f8d3d6acf9, Mathematica Policy Research.
    4. Baker, Laurence C & Corts, Kenneth S, 1996. "HMO Penetration and the Cost of Health Care: Market Discipline or Market Segmentation?," American Economic Review, American Economic Association, vol. 86(2), pages 389-394, May.
    5. Sheshinski, Eytan, 1976. "Price, Quality and Quantity Regulation in Monopoly Situations," Economica, London School of Economics and Political Science, vol. 43(17), pages 127-137, May.
    6. McGuire, Thomas G., 2000. "Physician agency," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 9, pages 461-536 Elsevier.
    7. Charles E. Phelps, 1992. "Diffusion of Information in Medical Care," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 23-42, Summer.
    8. Glied, Sherry, 2000. "Managed care," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 13, pages 707-753 Elsevier.
    9. McGuire, Thomas G. & Pauly, Mark V., 1991. "Physician response to fee changes with multiple payers," Journal of Health Economics, Elsevier, vol. 10(4), pages 385-410.
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    JEL classification:

    • I1 - Health, Education, and Welfare - - Health

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