Working Paper: NBER ID: w17535
Authors: James B. Rebitzer; Mark E. Votruba
Abstract: Economists seeking to improve the efficiency of health care delivery frequently emphasize two issues: the fragmented structure of physician practices and poorly designed physician incentives. This paper analyzes these issues from the perspective of organizational economics. We begin with a brief overview of the structure of physician practices and observe that the long anticipated triumph of integrated care delivery has largely gone unrealized. We then analyze the special problems that fragmentation poses for the design of physician incentives. Organizational economics suggests some promising incentive strategies for this setting, but implementing these strategies is complicated by norms of autonomy in the medical profession and by other factors that inhibit effective integration between hospitals and physicians. Compounding these problems are patterns of medical specialization that complicate coordination among physicians. We conclude by considering the policy implications of our analysis - paying particular attention to proposed Accountable Care Organizations.
Keywords: organizational economics; physician practices; healthcare delivery; accountable care organizations
JEL Codes: D02; D23; I11; I12; J4; J44; M5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Fragmentation (F12) | Poor Coordination (Y80) |
| Poor Coordination (Y80) | Inadequate Patient Outcomes (I11) |
| Fragmentation (F12) | Inadequate Patient Outcomes (I11) |
| Integrated Care (I11) | Improved Patient Care (I11) |
| Poor Incentives (D82) | Inefficiencies (D61) |
| Implementation of ACOs (L39) | Improved Care Coordination (I11) |
| Improved Care Coordination (I11) | Better Patient Outcomes (I11) |
| Implementation of ACOs (L39) | Better Patient Outcomes (I11) |