Working Paper: NBER ID: w19242
Authors: Erin M. Johnson; M. Marit Rehavi
Abstract: This paper provides new evidence on the interaction between patient information and financial incentives in physician induced demand (PID). Using rich microdata on childbirth, we compare the treatment of physicians when they are patients with that of comparable non-physicians. We exploit a unique institutional feature of California to determine how inducement varies with obstetricians' financial incentives. Consistent with PID, physicians are almost 10 percent less likely to receive a C-section, with only a quarter of this effect attributable to differential sorting of patients to hospitals or obstetricians. Financial incentives have a large effect on C-section probabilities for non-physicians, but physician-patients are relatively unaffected. Physicians also have better health outcomes, suggesting overuse of C-sections adversely impacts patient health.
Keywords: Physician-Induced Demand; Childbirth; C-Sections; Health Economics
JEL Codes: I10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial incentives (M52) | c-section rates for non-physician mothers (J89) |
| HMO-owned hospitals (I11) | c-section rates for non-physician mothers (J89) |
| Financial environment (G21) | treatment decisions of physician mothers (I11) |
| Physician mothers (J44) | health outcomes (I14) |
| Physician status (I11) | c-section rates (J13) |