Behavioral Economics and Physician Behavior

This study seeks to answer whether the availability heuristic leads physicians to utilize more medical care than is economically efficient. Do rare, salient events alter physicians' perceptions about the probability of patient harm? Do these events lead physicians to overutilize certain medical procedures? This study uses Pennsylvania inpatient hospital admissions data from 2009 aggregated at the physician level to investigate these questions. The data come from the 2009 Pennsylvania Health Care Cost Containment Council (PHC4). The study is divided into two parts. In Part I, we examine whether bad outcomes during childbirth (defined as maternal mortality, an obstetric fistula or a uterine rupture) lead physicians to utilize more cesarean sections on future patients. In Part II, we examine whether bad outcomes associated with appendicitis (defined as patient death, a perforated or ruptured appendix or sepsis) lead physicians to perform more negative appendectomies (appendectomies performed when the patient did not have appendicitis) on future patients. Overall the study does not find evidence to support the claim that the availability heuristic leads physicians to overutilize medical care on future patients. However, the study does find evidence that variations in health care utilization are strongly correlated with individual physician practice patterns. The results of the study also imply that physicians' financial incentives may be a source of variation in health care utilization.