The Production of and Market for New Physicians' Skill

Andrew J. Epstein, Sean Nicholson, David A. Asch

NBER Working Paper No. 18678
Issued in January 2013
NBER Program(s):   HC   LS

Our understanding of the determinants of physician skill and the extent to which skill is valued in the marketplace is superficial. Using a large, detailed panel of new obstetricians, we find that, even though physicians’ maternal complication rates improve steadily with years of practice, initial skill (as measured by performance in a physician’s first year of practice) explains most of the variation in physician performance over time. At the same time, we find that the trajectories of new physicians’ delivery volume develop in a way partially consistent with Bayesian learning about physician quality. In particular, as physicians gain experience, their volume becomes increasingly sensitive to the information in their accumulated prior.

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Acknowledgments

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