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Do Treatment Decisions Depend on Physicians` Financial Incentives?

Brekke, Kurt R.; Holmås, Tor Helge; Karin, Monstad; Straume, Odd Rune
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http://hdl.handle.net/11250/296600
Issue date
2015-07
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  • Discussion papers (SAM) [554]
Abstract
We study whether and how physicians respond to financial incentives, making use of

detailed register data on the health-care services provided to patients by general practitioners

(GPs) in Norway over a six-year period (2006-11). To identify GPs' treatment responses,

we exploit that specialisation in general medicine entitles the GPs to a higher consultation

fee, implying a change in total and relative fee payments. To control for demand and supply

factors related to becoming a specialist, we estimate a GP fixed effect model focusing on a

narrow time window around the date of specialist certification. Our results show a sharp

response by the GPs immediately after obtaining specialist certification and thus a higher

consultation fee: the number of visits increase, while the treatment intensity (prolonged

consultations, lab tests, medical procedures) decline. These findings are consistent with a

theory model where (partly) profit-motivated GPs face excess demand and income effects

are sufficiently small. Finally, we find no evidence for adverse health effects (measured by

emergency care centre visits) on patients due to the change in GPs' treatment behaviour

after becoming a specialist.
Publisher
SAM
Series
Discussion paper;15/15

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