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THE PHYSICIAN LABOR MARKET IN A MANAGED CARE‐DOMINATED ENVIRONMENT
Author(s) -
Hirth Richard A.,
Chernew Michael E.
Publication year - 1999
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1999.tb01430.x
Subject(s) - managed care , restructuring , economics , incentive , labour economics , skepticism , dysfunctional family , microeconomics , medicine , health care , finance , economic growth , clinical psychology , philosophy , epistemology
The belief that doctors respond to declining demand by treating patients more aggressively has created skepticism about relying on market forces to restructure physician supply. We argue that even if the physician labor market is dysfunctional under fee‐for‐service incentives, it can perform better as managed care becomes dominant. Our model implies a nonlinear effect of managed care penetration on incomes. Physicians can offset most or all of initial declines in demand, but cannot insulate themselves indefinitely. This may explain the observation that, until recently, the growth of managed care has not been accompanied by large physician income changes. ( JEL III, J31)