Venue: The Fuqua School of Business, Duke University, 1 Towerview Drive, Durham, NC 27708-0120
Presentation
Who Join Group Practice?
Basic economics of group practice suggests that hours worked would fall as the individual physician’s share of marginal revenue falls. There may be economies or diseconomies of scale, since total costs would decrease due to efficiency or rise as an individual physician’s share of costs falls (Newhouse, 1973). Getzen (1984) suggests that a brand name firm theory considering quality, reputation and increased demand may explain the economics of group practice better. Lin et al. (2006) find that physicians in group practice tend to enjoy higher income. So far, cross-sectional comparison suggests that physicians in group practice enjoy higher income. Few studies are able to offer evidence from a longitudinal point of view, question remains whether high-income physicians choose to join group practice to work less hours, or physicians who join group practice tend to enjoy an increase in income.
This study investigates the pre-existing characteristics of physicians who join group practice, including lagged income. The sample includes 4,912 physicians who worked as solo practitioners contracted by Taiwan’s National Health Insurance during 1997 and never worked in hospitals through 2004. I follow their practice decisions from the national health insurance records. Physician incomes are estimated from monthly claims. Physicians may choose practice modes between solo practice and group practice. I estimate panel logit models for their first group practice decision using an 8-year data set that spans the implementation of global budget in 2001.
About 22 percent of the sample had later joined group practice during the study period. Preliminary results indicate that higher lagged income is positively associated with the decision of group practice. We cannot rule out that apparent high-income of group practitioners is a reason to rather than a result of their practice decision.