Variations in the use of medical resources, both across and within geographical regions, have been widely documented. In this paper we explore physician practice styles as a possible determinant of these variations. In particular, we exploit patient mobility between physicians to identify practice styles among general practitioners (GPs) in Austria. We use a large administrative data set containing detailed information on a battery of different healthcare services, and implement a model with additive patient and GP fixed effects that allows flexibly for systematic differences in patients’ health states. We find that, while GPs explain a relatively small part of the overall variation in medical expenses, heterogeneities in spending patterns among GPs are substantial. Conditional on patient characteristics, we document a difference of €751.47 per patient per year in total medical expenses (which amounts to roughly 45% of the sample mean) between high- and low-spending GPs.
Healthcare expenditures practice styles physician behavior statistical decomposition