The Economics of Physician Behavior

Abstract

Physicians form the core of healthcare markets, with their behavior determining outcomes and costs. My dissertation consists of three chapters that examine the economics of physician behavior. In particular, I examine how the organization of markets, human capital development, and financial incentives influence the treatment decisions that physicians make.

In Chapter 1, I examine how the presence of an illegal, secondary market for prescription opioids influences both the prescribing practices of physicians and the equilibrium allocation of these prescriptions. To do so, I develop and estimate a model of physician behavior in the presence of a secondary market with patient search. Estimates demonstrate that cracking down on the secondary market, while useful in controlling the allocation of prescription opioids, will have the unintended consequence of inducing physicians to be even more lenient in their prescribing.

In Chapter 2, Janet Currie and I consider the role that education plays in determining a physician’s prescribing habits. Using comprehensive prescription data, we uncover a striking relationship between opioid prescribing and medical school rank. Even within the same specialty and practice location, physicians who completed their initial training at top medical schools write significantly fewer opioid prescriptions than physicians from lower ranked schools. Additional evidence suggests that some of this gradient represents a causal effect of education rather than patient selection across physicians or physician selection across medical schools.

Finally, in Chapter 3, Diane Alexander and I examine how the amount a physician is paid influences who they are willing to see. To do so, we exploit large, exogenous changes in Medicaid reimbursement rates to quantify the impact of physician payment on access to treatment and health. We find that increasing Medicaid payments to primary care doctors is associated with improvements in access, better self-reported health, and fewer school days missed among beneficiaries.