Abstract:
This paper estimates the within-physician marginal returns to healthcare in a large but understudied segment of the healthcare sector – the emergency department (ED). My empirical strategy exploits quasi-random assignment of physicians to coworker teams to generate instruments for case-level inputs based on workplace peer effects. I use time-stamped case-level data on millions of ED visits across New York State from 2005-2013 to infer time-varying coworker groups. I find that a physician’s peers are influential in determining her pace of work. Peer effects have a variance one quarter to one third as large as physician effects within a hospital.
I use peer-induced variation in a physician’s work pace to estimate the impacts of speeding a physician up on other inputs and on patient outcomes, namely 30-day mortality. I find robust evidence that physicians in fast-paced team environments ration care on other dimensions (tests and spending), causing increases in mortality among at-risk patients and cases with particularly vague symptoms. Among fast, low-spending physicians, marginal returns to time are high, whereas among slower physicians marginal returns are 0. At first glance, this is strong evidence of diminishing returns to treatment. However, the cross-physician relationship between intensity of care and patient outcomes is flat, suggesting
that physicians operate on very different production functions, even within hospitals, and even within a single department of the hospital. Reallocation of time and testing away from slow physicians to fast physicians could produce efficiency gains. I discuss implications for increasingly popular physician-targeted incentives to cut back on wasteful care.
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Host: Manudeep Bhuller