Abstract
There is increasing empirical evidence of patient harm and resource waste from
over-diagnosis, over-treatment, medical errors, and the underuse of effective care. This chapter reviews recent literature on physician behavior and health outcomes. Research on the economics of physician behavior takes a classical economic perspective based on using financial incentives to solve information problems in healthcare markets. The evidence on payment methods, competition and market organization, and information interventions is summarized. Incentives matter, but may
matter less in the presence of altruistic motives amongst most physicians, as well as the presence of complex multi-tasking decision environments. More contemporary research on physician behavior has taken a behavioral perspective where it is acknowledged that physician decision making can be biased even in cases where incentive and information problems are absent. The large health services
research literature on professional behavior change incorporates behavioral and psychological perspectives yet integration into economic models of physician behavior is still in its early stages.
Though research on incentives continues to dominate the health economics literature, evidence suggests that behavioral approaches are important not only in understanding incentives, but in changing physicians’ behavior using non-pecuniary interventions.
JEL-Classification: D82 ; I11 ;I19 ; J33 ; D47
Keywords: Physician behavior, Physician payment, Health outcomes, Market organization