Revisiting physicians' financial incentives in Quebec: a panel system approach

Area of Science:

• Health Economics
• Physician Behavior
• Healthcare Policy

Background:

• Understanding physician responses to financial incentives is crucial for healthcare policy.
• Previous studies have faced limitations in correcting for biases and analyzing physician decision-making complexity.

Purpose of the Study:

• To investigate whether Primary Care Physicians (PCPs) strategically react to financial incentives.
• To analyze the complementarity or substitution between different types of physician consultations based on technicality and reimbursement.

Main Methods:

• Utilized a quasi-natural experiment in Quebec.
• Employed a panel system technique to correct for underestimation biases and analyze physician heterogeneity.
• Examined temporal breaks and jointness in consultation patterns.

Main Results:

• PCPs demonstrated sensitivity to expenditure caps and changes in consultation relative prices.
• Evidence supports discretionary power in consultation choice, with PCPs increasing more technical, lucrative services when income is pressured.
• Findings parallel the 'DRG creep' observed in hospital settings.

Conclusions:

• PCPs exhibit strategic behavior in response to financial regulations and incentives.
• The panel system approach provides robust estimates of physician volume and quality reactions to regulatory changes.
• Physician decision-making is complex, influenced by factors like heterogeneity and consultation jointness.