How Do Primary Care Physicians Influence Healthcare? Evidence on Practice Styles and Switching Costs from Medicare

Primary care physicians have a central, coordination role in medicine, yet little is known about their impacts on healthcare utilization. I study the short-run and long-run effects of switching to different primary care physicians on utilization in terms of spending among Medicare patients over age 65. First, I show that patients who switch from a primary care physician whose other patients have low utilization to one whose other patients have high utilization experience increases in long-run utilization, whereas patients who switch in the opposite direction experience decreases. Regardless of the direction of the change, patients experience short-run increases in utilization around the switch. Using a model that includes both patient and physician fixed effects, I find that differences in primary care physician practice styles, as measured by spending, explain 2-3% of the variation in long-run total utilization and about 13% of the variation in long-run primary care utilization within healthcare markets. To estimate the short-run effects of changing primary care physicians on utilization, I focus on patients who involuntarily switch because their physicians relocate or retire. Each primary care physician switch leads to approximately $500-725 in additional costs, and 20-30% comes from temporary increases in primary care utilization. Combining my findings, I construct counterfactuals and find that policies that reallocate patients across primary care physicians could potentially be counterproductive due to modest long-run savings and substantial short-run switching costs