Variation in Physician Practice Styles within and across Emergency Departments

Despite the significant responsibility that physicians have in healthcare delivery, we know surprisingly little about why physician practice styles vary within or across institutions. Estimating variation in physician practice styles is complicated by the fact that patients are rarely randomly assigned to physicians. This paper uses the quasi-random assignment of patients to physicians in emergency departments (EDs) to show how physicians vary in their treatment of patients with minor injuries. The results reveal a considerable degree of variation in practice styles within EDs; physicians at the 75th percentile of the spending distribution spend 20% more than physicians at the 25th percentile. Observable physician characteristics do not explain much of the variation across physicians, but there is a significant degree of sorting between physicians and EDs over time, with high-cost physicians sorting into high-cost EDs as they gain experience. The results may shed light on why some EDs remain persistently higher-cost than others.