Exploring variations in health‐care expenditures—What is the role of practice styles?

from Health Economics at http://bit.ly/38KhqJd on February 20, 2020 at 01:10PM

Abstract

Variations in medical resource usage, both across and within geographical regions, have been widely documented. In this paper, we explore physician practice styles as a possible determinant of these variations. In particular, we exploit patient mobility between physicians to identify practice styles among general practitioners (GPs) in Austria. We use a large administrative data set containing detailed information on a battery of different health‐care services and implement a model with additive patient and GP fixed effects that allows flexibly for systematic differences in patients’ health states. We find that, although GPs explain only a small part of the overall variation in medical expenses, heterogeneities in spending patterns among GPs are substantial. Conditional on patient characteristics, we document a difference of € 751.47 per patient per year in total medical expenses (which amounts to roughly 45% of the sample mean) between high‐ and low‐spending GPs.