From a new NBER working paper by Erin Johnson and M. Marit Rehavi:
We find that physician-mothers are significantly less likely to have a C-section than other highly educated patients. In California physician-mothers are 7% less likely to have a C-section; in Texas there is an 8% difference. This difference stems not from different preferences for attempting labor, but instead comes almost entirely from the two-thirds of C-sections that are performed after an attempt at labor (herein “unscheduled C-sections”). Doctors are 11% less likely to be ushered into surgery as a result of complications arising during labor or the failure of labor to progress. Moreover, even after accounting for differential sorting of patients to hospitals, physician-mothers have unscheduled C-section rates that are 9% lower than other educated mothers. After controlling for the attending obstetrician, the difference is just under 8% in Texas.
We also find a stark difference in the impact of the incentive environment on informed and uninformed patients. Financial incentives have a large effect on a non-physician’s probability of receiving a C-section: in hospitals where there is a financial incentive to perform C-sections, they have much higher C-section rates. However physician-patients appear to be unaffected by the financial environment on net (they have the same risk-adjusted C-section rates inside and outside of HMO-owned hospitals). These results suggest financial incentives are an important determinant of treatment; and that patient information is an effective counterweight.
The consequences of these treatment differences are not only financial. Physician mothers and their infants have reduced morbidity compared with other patients. Moreover, it appears that physicians achieve these outcomes without using more hospital resources. Controlling for method of delivery (and netting out the substantial cost savings of fewer C-sections among physician-mothers), the hospital charges for physician-births are similar to those of non-physicians.
Here’s one, of several, previous TIE posts on supplier induced demand.
