A Structural Misclassifcation Model to Estimate the Impact of Physician Incentives on Healthcare Utilization
The issue of over-utilization of medical procedures has generated strong debate in the United States. It is well acknowledged that, in the agency relationship between physicians and patients, the informational advantage gives doctors an incentive to deviate from the appropriate treatment as defined for a patient's health status, thus incurring over- or under- utilization. However, the empirical consequence of this problem has not been adequately considered. In particular, physician agency breaks the correspondence between appropriate treatment and observed treatment, generating a problem whose characteristics and efects on estimation are analogous to a classifcation error. However, the error is non-random. Empirical literature that does not consider the misclassifcation problem understates the impact of clinical and non-clinical factors on healthcare utilization. This paper proposes a structural misclassification model in which the physician behavior is modeled to characterize the structure of the measurement error. The model captures the interaction between a physician's incentives and a patient's health status, and returns consistent estimators. It also lets us identify the degree of deviation from appropriate treatment (misclassifcation probability) due to physician incentives, and to compute risk-adjusted utilization rates based on clinical factors only. The model is applied to the cesarean section deliveries performed in the state of New Jersey during the 1999-2002 period. Our results show a moderate but growing rate of non-clinically required c-sections of around 3.2%. We conclude that the growth of the c-section rates in New Jersey over these years is explained mainly by non-clinical factors.
|Date of creation:||Nov 2007|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John M. Abowd & Henry S. Farber, 1982. "Job Queues and the Union Status of Workers," ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
- Victor R. Fuchs & Mark B. McClellan & Jonathan S. Skinner, 2004.
"Area Differences in Utilization of Medical Care and Mortality among U.S. Elderly,"
in: Perspectives on the Economics of Aging, pages 367-414
National Bureau of Economic Research, Inc.
- Victor R. Fuchs & Mark McClellan & Jonathan Skinner, 2001. "Area Differences in Utilization of Medical Care and Mortality Among U.S. Elderly," NBER Working Papers 8628, National Bureau of Economic Research, Inc.
- Meng, Chun-Lo & Schmidt, Peter, 1985. "On the Cost of Partial Observability in the Bivariate Probit Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 71-85, February.
- repec:adr:anecst:y:1999:i:55-56:p:09 is not listed on IDEAS
- Poirier, Dale J., 1980. "Partial observability in bivariate probit models," Journal of Econometrics, Elsevier, vol. 12(2), pages 209-217, February.
- Donald S. Kenkel & Dean R. Lillard & Alan D. Mathios, 2004. "Accounting for misclassification error in retrospective smoking data," Health Economics, John Wiley & Sons, Ltd., vol. 13(10), pages 1031-1044.
- 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.
- Victor R. Fuchs, 1978. "The Supply of Surgeons and the Demand for Operations," NBER Working Papers 0236, National Bureau of Economic Research, Inc.
- Jonathan Gruber & Maria Owings, 1994.
"Physician Financial Incentives and Cesarean Section Delivery,"
NBER Working Papers
4933, National Bureau of Economic Research, Inc.
- Jonathan Gruber & Maria Owings, 1996. "Physician Financial Incentives and Cesarean Section Delivery," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 99-123, Spring.
- Hausman, J. A. & Abrevaya, Jason & Scott-Morton, F. M., 1998. "Misclassification of the dependent variable in a discrete-response setting," Journal of Econometrics, Elsevier, vol. 87(2), pages 239-269, September.
- Kris De Jaegher & Marc Jegers, 2001. "The physician-patient relationship as a game of strategic information transmission," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 651-668.
- Arthur Lewbel, 2000.
"Identification of the Binary Choice Model with Misclassification,"
Boston College Working Papers in Economics
457, Boston College Department of Economics.
- Lewbel, Arthur, 2000. "Identification Of The Binary Choice Model With Misclassification," Econometric Theory, Cambridge University Press, vol. 16(04), pages 603-609, August.
- Bin Xie & David M. Dilts & Mikhael Shor, 2006. "The physician-patient relationship: the impact of patient-obtained medical information," Health Economics, John Wiley & Sons, Ltd., vol. 15(8), pages 813-833.
- Dranove, David, 1988. "Demand Inducement and the Physician/Patient Relationship," Economic Inquiry, Western Economic Association International, vol. 26(2), pages 281-98, April.
- repec:adr:anecst:y:1999:i:55-56 is not listed on IDEAS
- Jason Abrevaya & Jerry A. Hausman, 1999. "Semiparametric Estimation with Mismeasured Dependent Variables: An Application to Duration Models for Unemployment Spells," Annals of Economics and Statistics, GENES, issue 55-56, pages 243-275.
- Dale Tussing, A. & Wojtowycz, Martha A., 1993. "The effect of physician characteristics on clinical behavior: Cesarean section in New York State," Social Science & Medicine, Elsevier, vol. 37(10), pages 1251-1260, November.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:6718. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.