Session: Self-Referral: Researching Beyond the Familiar Paradigm
Room: Phillips 407
Time: Mon 13:15-14:45

Presenter: Stefan Listl (University of Mannheim & University of Heidelberg. Economics (MEA) & Dental School)

Discussant: David ClarkNational Institute of Dental & Craniofacial Research

Abstract

Previous literature on utilization of health services has usually been investigating supply and demand side cost sharing influences distinct from each other. Yet a frequent scenario in many health systems is that different extents of both patient’s and doctor’s financial incentives operate simultaneously. Therefore this study aims to test whether simultaneous consideration of supply and demand side cost sharing yields different findings than previous studies, using dental diagnostics in NHS Scotland as an example.

We use 2001 to 2005 panel data from the Management Information and Dental Accounting System (MIDAS) which provides 388,652 claims by Scottish dentists for non-traumatic treatment delivered to NHS patients above 18 years of age. Controlling for unobserved heterogeneity from patients and/or dentists we estimate a series of fixed-effects models in order to identify the influence of demand and supply side cost sharing on utilization of diagnosis via mirror/probe or via small x-ray imaging, respectively. Note that according to the specific regulations of NHS Scotland dentists are only reimbursed once per 6 months for mirror/probe examination(s) provided to the same patient. In contrast, there is no restriction in doctor’s reimbursement regarding the quantity of dental x-rays provided to patients.

We find a significant and large effect of doctor’s reimbursement type on the extent to which mirror/probe examinations are utilized: salaried dentists apply by about 14 % less mirror/probe examinations than their colleagues who are paid fee for service. For the utilization of dental x-rays, we observe significant and about equally sized effects of both doctor’s reimbursement and patient’s insurance coverage: first, salaried dentists apply by about 3 % less dental x-rays examinations than their colleagues who are paid fee for service; second, patients who are exempt from treatment charges utilize by about 3 % more dental xrays than patients who face full cost sharing. In addition, if conditioning use of x-rays on prior use of mirror/probe examinations, there is a particular increase in utilization of x-rays for patients who are exempt from charges and treated by a salaried dentist.

This study shows how financial incentives for both doctor and patient simultaneously determine utilization of dental diagnostics. Specifically, the observed utilization patterns suggest that dentists are influenced by reimbursement schemes when they advice x-rays. Then, upon advice of an x-ray by the dentist, patients appear to follow the ex post consumer moral hazard track. We conclude that our results may be relevant for policy makers who seek quantity setting of health services via patients’ and/or doctors’ cost sharing. On the one hand, the example of mirror/ probe examinations suggests that patients’ moral hazard can be addressed via restricting the quantity of services which are claimable by doctors. On the other hand, the observed patterns of x-ray utilization point out that patient moral hazard effects may specifically arise when there is no restriction in the amount of services which are claimable by doctors. In such circumstances, patient’s moral hazard may hence counteract the effectiveness of policies solely aiming at the supply side.

Key Terms

ex post moral hazard, physician agency, utilization of dental services, diagnostic methods, demand and supply side cost sharing, dentist's remuneration.

Authors:

Stefan Listl (University of Mannheim & University of Heidelberg. Economics (MEA) & Dental School)