CAREER: Empirical Studies of Incentive Design, Information Technology Use, and Productivity in Physical Markets

Health care cost growth is one of the central policy problems the U.S. currently faces: 17.4% of U.S. GDP is devoted to health care spending while 43% of all health spending comes from federal, state, and local governments. While high spending can be justified given the potential value of health services, recent research indicates that spending could be reduced without negatively affecting health. The Affordable Care Act of 2010 greatly increased access to health care but included few provisions to meet the cost growth challenge head on. Current policy approaches to facilitate efficient health care spending include (i) consumer cost-sharing (ii) health technology assessment (iii) physician payment reform and (iv) improved use of IT.

This project seeks to advance our understanding of how to improve population health in a cost-effective manner. It focuses on better understanding (i) how physicians respond to financial incentives for providing quality health care and (ii) how physician treatments respond to the availability of sophisticated IT tools. Despite the importance of understanding these medical provider behaviors, there is limited research on these topics. The project leverages unique data and employs cutting edge methods in economics to advance our scientific understanding of physician and patient behaviors in these domains. These research advances should have direct implications for policies that seek to improve national health and well-being in a cost-effective manner.

In addition to this research dimension, the project will set up a workshop for graduate students in health economics designed to promote a comprehensive understanding of the scientific techniques necessary to make advances in this field in original research. This workshop will bring together leading health economists from across the country to train Ph.D. students in both health economics and health policy. Both the proposed and proposed workshop will have broader impacts beyond just the scientific advances, including policy impacts in the space of health care and professional impacts in training a new generation of health economists.

On the research side, this project investigates several new large-scale datasets that track both physician behaviors and patient behaviors in detail. The first environment to be studied is the Hawaii Medical Service Association (HMSA), the largest insurer in the state of Hawaii. HMSA has implemented a range of state-of-the-art quality incentive programs to encourage physicians to provide higher quality medical care. In addition, in 2012 HMSA led the system-wide implementation of a sophisticated IT tool that provides physicians with specific real-time information on their quality performance. In the context of these natural experiments, there are detailed administrative data on (i) patient behaviors and characteristics for over 700,000 patients and (ii) physician behaviors and characteristics for over 1,000 physicians. Key micro-level information are observed on exactly how physicians respond to quality incentives and use available IT, both before and after HMSA implemented specific key changes. The PI will leverage these micro-level data to investigate heterogeneous effects related to physician training, the profile of patients a physician treats, and characteristics of physician organizations. The analysis will be used to investigate ways to structurally improve physician quality incentives and use of IT with the goals of higher quality and more cost-effective health care.

The second environment that will be investigated is Maine Medical Center, which worked with a technology partner AgileMD to implement mobile technology that aids its 200+ physicians in the treatment of complex medical conditions. In this context, the PI will use a randomized evaluation, together with detailed data on physician behaviors and use of IT, to study the role of mobile technology on productivity.

This research program uses cutting edge methods in economics together with novel datasets to investigate key intellectual questions that will enhance our understanding of the economics of an important policy area. In addition to this intellectual merit, the project will have broader impact through both the policies it will impact and the workshop to train a new generation of health economists.