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Financial incentives and physician prescription behavior.Evidence from dispensing regulations

Author

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  • Burkhard, D.;
  • Schmid, C.P.R.;
  • Wüthrich, K.;
Abstract
In many healthcare markets, physicians can respond to changes in reimbursement schemes by changing the volume (volume response) and the composition of services provided (substitution response). We examine the relative importance of these two behavioral responses in the context of physician drug dispensing in Switzerland. We find that dispensing increases drug costs by 52% for general practitioners and 56% for specialists. This increase is mainly due to a volume increase. The substitution response is negative on average, but not significantly different from zero for large parts of the distribution. In addition, our results reveal substantial effect heterogeneity.

Suggested Citation

  • Burkhard, D.; & Schmid, C.P.R.; & Wüthrich, K.;, 2018. "Financial incentives and physician prescription behavior.Evidence from dispensing regulations," Health, Econometrics and Data Group (HEDG) Working Papers 18/17, HEDG, c/o Department of Economics, University of York.
    • Handle: RePEc:yor:hectdg:18/17
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    Cited by:

    1. Alexander Ahammer & Ivan Zilic, 2017. "Do Financial Incentives Alter Physician Prescription Behavior? Evidence from Random Patient-GP Allocations," Working Papers 1701, The Institute of Economics, Zagreb.
    2. Rachamin, Yael & Meier, Rahel & Valeri, Fabio & Rosemann, Thomas & Muheim, Leander, 2021. "Physician-dispensing as a determinant of clinical and process measurements in patients at increased cardiovascular risk: A cross-sectional study in Swiss general practice," Health Policy, Elsevier, vol. 125(10), pages 1305-1310.
    3. Fabienne Loetscher, Christian P.R. Schmid, Michael Gerfin, "undated". "The effect of higher out-of-pocket payments on drug prices and demand," Diskussionsschriften dp2405, Universitaet Bern, Departement Volkswirtschaft.
    4. Hjalmarsson, Linn & Schmid, Christian P.R. & Schreiner, Nicolas, 2024. "A Prescription for Knowledge: Patient Information and Generic Substitution," Working papers 2024/05, Faculty of Business and Economics - University of Basel.
    5. Müller, Tobias & Schmid, Christian & Gerfin, Michael, 2023. "Rents for Pills: Financial incentives and physician behavior," Journal of Health Economics, Elsevier, vol. 87(C).
    6. Olivia Bodnar & Hugh Gravelle & Nils Gutacker & Annika Herr, 2024. "Financial incentives and prescribing behavior in primary care," Health Economics, John Wiley & Sons, Ltd., vol. 33(4), pages 696-713, April.
    7. Meng‐Chi Tang, 2023. "A structural analysis of physician agency and pharmaceutical demand," Health Economics, John Wiley & Sons, Ltd., vol. 32(7), pages 1453-1477, July.
    8. Stacherl, Barbara & Renner, Anna-Theresa & Weber, Daniela, 2023. "Financial incentives and antibiotic prescribing patterns: Evidence from dispensing physicians in a public healthcare system," Social Science & Medicine, Elsevier, vol. 321(C).
    9. Peter Zweifel, 2022. "Preference measurement in health using experiments," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(1), pages 49-66, March.
    10. Boris Kaiser, 2017. "Gender-specific practice styles and ambulatory health care expenditures," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(9), pages 1157-1179, December.

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    More about this item

    Keywords

    physician agency; drug expenditures; volume response; substitution response; physician dispensing;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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