Some of the variation in health utilization and spending is undoubtedly due to different physician practice styles. A new paper attempts to understand the effect of those practice style differences on patient outcomes and health. (NBER Paper) Variations in spending could be due to legitimate differences in patients’ medical needs or to supply side factors, like physician practice patterns, which in turn could be driven by training, beliefs about what constitutes the best medical care or responses to financial incentives. Different policy responses would be needed to address each of those drivers. Previous research has suggested that roughly half of variation might be due to supply side factors, specifically practice pattern differences. But there has been little detailed research on practice styles for primary care physicians, who often control much of the total medical care a patient receives. In the current paper the authors use the case of exits of primary care providers from the Medicare program or relocation of their primary practice area, to identify potential changes in the care patients received when they switched to a new physician. 195,000 patients from 2007 to 2013 who changed primary care doctors were used for the paper. There were about 381,000 primary care doctors in the data set and around 27,000 relocated and 22,000 retired during the study period. Average annual spending for the beneficiaries who ended up in the data set was $11,634 and the patients made an average of 8.1 office visits a year.
Physicians practice styles were categorized by 13 different measures, including health spending, utilization and delivery of low and high quality care. As examples of low quality care the researchers used ER visits and ambulatory care sensitive hospitalizations. As examples of high-quality care, flu vaccinations and consistency with guidelines for care of patients with diabetes were used. The authors’ basic finding is that a new primary care physician creates an immediate impact on utilization and that effect appears to persist for at least 6 years. As a general example, a patient who switches to a primary care doctor with a $100 higher physician-spending intensity sees their own spending on physician services increase by an average of $54 after the switch. There is a similar, but smaller impact on total health spending. For each additional $100 in total health care spending by the primary care doctor switched to, the new patient experiences a $48 increase in spending in the first year, but that declines to $31 in later years. This suggests that practice style affects physician spending more than spending in other categories. The effect appears strongest in physician and outpatient spending and lower for drug, inpatient and post-acute spending, although still significant at around $30 to $40. The effect was similar for raw utilization measures, as a patient’s office visits increased substantially when switching to a doctor who patients had more visits. The number of conditions diagnosed also increases.
The change in physicians can have quality implications as well. For example, switching to a doctor with a 10 percentage point higher flu vaccination rate results in a 6 percentage point greater likelihood that the patient will get a vaccination. And switching to a physician with higher numbers of ER visits and avoidable hospitalizations means the patients who switch are more likely to experience those events. More change occurred for patients switching to providers in the same primary care practice than to a doctor in a completely different practice. So overall, this study is consistent with the idea that practice styles can strongly affect health care utilization, spending and quality. Identifying doctors with more intensive styles and providing educational interventions and financial incentives may help reduce variation and spending. It should be noted that this study included only fee-for-service Medicare beneficiaries. I strongly suspect that we would see different results for Medicare Advantage enrollees and we would see different results for certain primary care provider groups that are focused on at-risk Medicare Advantage patients or are in accountable care organizations.