Does Physician Compensation Impact Procedure Choice and Patient Health?
No 1475, Working Papers from Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing.
I find that compensation structure impacts a doctor?s decision to perform a Cesarean section (C-section). Using Medicaid reimbursement and vital statistics data, I find that fee-for-service doctors respond to an increase in the relative reimbursement for C-sections by increasing their use of the procedure. These incentives are not passed through to salaried doctors ? their Csection use remains constant at the same lower rate as fee-for-service doctors who are paid the same for both procedures. For fee-for-service doctors who face pay differentials, however, the increase in C-section use due to increases in the pay difference is associated with fewer infant deaths. Thus, this paper demonstrates the difficulty in lowering procedure use while holding patient health constant; from a policy perspective, the consequences for patients of changing physician behavior must always be kept in mind.
Keywords: Medicaid; health costs; c-section; cesarean section; births; reimbursement; compensation; doctors (search for similar items in EconPapers)
JEL-codes: I11 I12 I18 (search for similar items in EconPapers)
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