How Do Doctors Behave When Some (But Not All) of Their Patients are in Managed Care?

Sherry Glied, Joshua Zivin

NBER Working Paper No. 7907
Issued in September 2000
NBER Program(s):Health Care Program

Most physicians today treat a variety of patients within their practices and operate in markets where a variety of insurance arrangements co-exist. In this paper, we propose several theoretical explanations for physician treatment patterns when the patient population is heterogeneous at the practice and market level. Data from the 1993-1996 National Ambulatory Medical Care Survey (NAMCS) are used to test how practice-level and market-level HMO penetration affect treatment intensity. Practice composition has strong effects on treatment. HMO-dominated practices have shorter, but otherwise more treatment intensive visits than do other practices. Market characteristics are less important determinants of treatment. As HMO practice share rises, the differences between the treatment of non-HMO and HMO patients are attenuated. These results provide strong evidence for a model of physician behavior with fixed costs of effort in the form of visit duration. For tests ordered, medications prescribed, and return visits specified, the empirical evidence supports a model with marginal cost pricing for excess capacity. HMO and non-HMO treatment patterns are most distinct at the level of the practice, not the patient. HMO-dominated practices appear to use a practice style that is quite different from that used in other practices. These findings suggest that practices are likely to become more segregated over time.

download in pdf format
   (272 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w7907

Published: Glied, Sherry and Joshua Graff Zivin. "How Do Doctors Behave When Some (But Not All) Of Their Patients Are In Managed Care?," Journal of Health Economics, 2002, v21(2,Mar), 337-353. citation courtesy of

Users who downloaded this paper also downloaded* these:
Dranove, Kessler, McClellan, and Satterthwaite w8697 Is More Information Better? The Effects of 'Report Cards' on Health Care Providers
Frank w10881 Behavioral Economics and Health Economics
Mullen, Frank, and Rosenthal w14886 Can You Get What You Pay For? Pay-For-Performance and the Quality of Healthcare Providers
Jacobson, Chang, Newhouse, and Earle w19247 Physician Agency and Competition: Evidence from a Major Change to Medicare Chemotherapy Reimbursement Policy
Barro and Beaulieu w10017 Selection and Improvement: Physician Responses to Financial Incentives
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us