NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Negative Tests and the Efficiency of Medical Care: What Determines Heterogeneity in Imaging Behavior?

Jason Abaluck, Leila Agha, Christopher Kabrhel, Ali Raja, Arjun Venkatesh

NBER Working Paper No. 19956
Issued in March 2014
NBER Program(s):   AG   HC   HE   PE

We develop a model of the efficiency of medical testing based on rates of negative CT scans for pulmonary embolism. The model is estimated using a 20% sample of Medicare claims from 2000- 2009. We document enormous across-doctor heterogeneity in testing decisions conditional on patient risk and show it explains the negative relationship between physicians' testing frequencies and test yields. Physicians in high spending regions test more low-risk patients. Under calibration assumptions, 84% of doctors test even when costs exceed expected benefits. Furthermore, doctors do not apply observables to target testing to the highest risk patients, substantially reducing simulated test yields.

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This paper was revised on August 13, 2015

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Document Object Identifier (DOI): 10.3386/w19956

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