The influence of market forces on how doctors treat urinary tract infections
Primary care doctors are often caught between conflicting forces--capitated payment methods (also termed supply-side cost sharing) that impose a negative marginal income with higher levels of resource use, and patient demand for high quality but possibly expensive medical care. I examine the effects of these opposing forces using a disease model of uncomplicated urinary tract infections. The theoretical model is based on a utility maximizing physician who incorporates the patient's utility into his demand function. I examine the doctor's optimal choice of resource use and uncompensated effort, and the effect of changes in the levels of supply-side cost sharing and the quality elasticity of demand (due to a change in the number of physicians per capita). The model predicts that an increase in physicians per capita should increase the likelihood of the doctor performing desired resource use and uncompensated effort behaviors. An increase in supply-side cost sharing should decrease resource use and uncompensated efforts that complement resource use, and increase uncompensated efforts that stimulate patient demand but substitute for resource use. In addition, as the quality elasticity of demand increases, the effects of supply-side cost sharing should be less pronounced. The predictions are tested using a 1994-95 survey asking primary care doctors how they treat urinary tract infections. Six clinical behaviors are related to the theoretical model's predictions. I estimate the effects of changes in market level of supply-side cost sharing and physicians per capita using four estimating approaches: logistic regression, ordinary least squares, two-stage least squares, and a Heckman selection model. The results indicate that the number of physicians per capita has a more pronounced effect than the level of supply-side cost sharing. There are no significant differences in the effects of supply-side cost sharing across high and low physician supply markets. The results suggest that increasing competition among doctors leads doctors to become better agents on behalf of their patients, while concerns about capitation leading to decreases in desired treatments are not borne out.
|Year of publication:||
|Authors:||Flach, Stephen Dale|
|Type of publication:||Other|
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