Venue: The Fuqua School of Business, Duke University, 1 Towerview Drive, Durham, NC 27708-0120
Presentation
Quantity versus Quality in Medical Care: Evidence from State Variation in Telemedicine Regulation
Health care provision is one of the major concerns for all policy makers. While not new, the issue of crafting effective health policies is further complicated by the fact that health care industry is already heavily regulated. As medical technology advances, new policies are proposed to reinforce previous regulation, raising the question whether old regulations are still optimal. In particular, technological progress stimulated the development of the field of telemedicine defined as physician-patient or physician- physician communication using telephones, videophones, fax machines, computers or any other device that enables the transmission of information between parties located at distance. Such services are suspected of being of lower quality because the physician has less information about the patient before taking a decision, thus raising the problem of the erosion of the quality standard imposed by licensing. Should we attempt to reinforce the existing regulation by regulating telemedicine more strictly? The design of new health policies requires credible estimates of the impact of regulation already in place. Physicians licensing has been widely adopted and many arguments pro and against were circulated but data limitations hindered previous efforts to offer a definitive answer to this question. In addition, since conditions have changed it is not obvious that even previous results are still relevant now.
This paper uses variation in state by state regulation mandating physicians to perform a physical examination before prescribing drugs to investigate whether licensing requirements are too strict. Such regulation is meant to prohibit physician-patient telemedicine practices, expected to be of lower quality than face-to face consultations, in order to prevent the erosion of the quality standards guaranteed by licensing. The empirical results suggest that states that adopted such regulation experience an increase in mortality, an indication that overall licensing requirements are too strict. The result does not hold across all specialties. However, there are indications to suggest there is a cumulative effect that may not be entirely captured in this paper due to the short period since the regulation was adopted