NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Physician Beliefs and Patient Preferences: A New Look at Regional Variation in Health Care Spending

David Cutler, Jonathan Skinner, Ariel Dora Stern, David Wennberg

NBER Working Paper No. 19320
Issued in August 2013
NBER Program(s):   AG   HC   HE

There is considerable controversy about the causes of regional variations in healthcare expenditures. We use vignettes from patient and physician surveys, linked to Medicare expenditures at the level of the Hospital Referral Region, to test whether patient demand-side factors, or physician supply-side factors, explains regional variations in Medicare spending. We find patient demand is relatively unimportant in explaining variations. Physician organizational factors (such as peer effects) matter, but the single most important factor is physician beliefs about treatment: 36 percent of end-of-life spending, and 17 percent of U.S. health care spending, are associated with physician beliefs unsupported by clinical evidence.

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Document Object Identifier (DOI): 10.3386/w19320

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