Measuring Changes in the Economics of Medical Practice

For the latter third of the twentieth century, researchers have estimated production and cost functions for physician practices. Today, those attempting to measure the inputs and outputs of physician practice must account for many recent changes in models of care delivery. In this paper, we review practice inputs and outputs as typically described in research on the economics of medical practice, and consider the implications of the changing organization of medical practice and nature of physician work. This evolving environment has created conceptual challenges in what are the appropriate measures of output from physician work, as well as what inputs should be measured. Likewise, the increasing complexity of physician practice organizations has introduced challenges to finding the appropriate data sources for measuring these constructs. Both these conceptual and data challenges pose measurement issues that must be overcome to study the economics of modern medical practice. Despite these challenges, there are several promising initiatives involving data sharing at the organizational level that could provide a starting point for developing the needed new data sources and metrics for physician inputs and outputs. However, additional efforts will be required to establish data collection approaches and measurements applicable to smaller and single specialty practices. Overcoming these measurement and data challenges will be key to supporting policy-relevant research on the changing economics of medical practice.