Physician Practice Style and Healthcare Costs: Evidence from Emergency Departments

Abstract

We study healthcare operations of emergency departments (EDs) by examining the practice styles and skills of ED physicians. Our data include all residents of Montreal, Canada, with an initial ED visit in Montreal during a nine-month period. For each visit, our data record the initial treating hospital, ED physician, ED billed expenditures, and all interactions with the health system within the subsequent 90 days. Physicians in Montreal rotate across shifts between simple and difficult cases, implying a quasi-random assignment of patients to physicians within an ED. We consider three medical conditions that present frequently in the ED and for which mistreatment may have dramatic consequences—angina, appendicitis, and transient ischemic attacks—jointly examining diagnostic and disposition skills. To control for variation in diagnosis, our sample for each condition consists of patients with a broader set of symptoms and signs potentially indicative of the condition. Separately by condition, we regress healthcare usage and cost measures on indicators for physicians to estimate the skill and practice style of each physician. We then evaluate the variation across physicians in their practice style and skills and the correlations between different measures of skill and practice style. We find significant variation across physicians in their practice styles and skills. We also find that physicians with costly practice styles often have worse outcomes in terms of more ED revisits and more hospitalizations. Finally, the practice styles and skills of physicians correlate positively across the three conditions that we consider. This paper was accepted by Jayashankar Swaminathan, operations management.