Three essays on health economics: Theoretical and experimental evidence on physician behavior

Abstract

A few years ago, I worked with physicians from different clinical specialties in health technology assessment studies. During these interactions, I learned about particular aspects of clinical decision-making that attracted my attention because of their economic implications. For instance, I was unaware that some physicians could receive cash transfers from pharmaceutical companies to promote basic biomedical research or even funding to attend continuing medical education events (Genta-Mesa and Flórez, 2019). In fact, physicians also pursue economic benefits, and conflicts of interest are always present in clinical practice. While many of us have witnessed the presence of medical sales representatives at the door of a doctor's office, we also know that, in general, doctors are interested in the well-being of their patients. Indeed, it has been particularly evident during the global health crisis imposed by the coronavirus pandemic. COVID-19 disease has placed pressures on healthcare systems worldwide, causing physicians to prioritize the use of limited resources in Intensive Care Units based on patient characteristics. Medical staff have had to deal with stressful long working hours and have had to take considerable ethical burdens since their decisions finally affect who lives and who dies. Physicians' decisions are difficult and complex, not only because they are exposed to incentives or budgetary constraints that may affect their behavior but also because they have intrinsic motivations that are often closely related to the well-being of patients. They play perhaps the most crucial role in prescribing treatments and drugs, and their decisions significantly impact healthcare spending. Aware of this situation, third-party payers (private insurers or Public Health Systems) also seek to implement strategies to contain costs derived from medical decision-making. This thesis is a collection of essays in which I study physicians' behavior in settings where different economic incentives and scarcity of resources to treat patients are present. In Chapter 1, we analyze how optimal contracts could align the incentives of a physician and a third-party payer in a principal-agent model for drug prescription with non-compliant patients. The physician exerts an effort level during the prescription process, which can substitute technology that benefits non-compliant patients. Additio-nally, a pharmaceutical company promotes the prescription of the drug with said technology by giving a transfer to the physician. We find that the third-party could use a bonus to reach optimal contracts in which the physician prescribes the drug without the technology (less expensive) and exerts a positive effort level. When the effort and the drug choice are not contractible, the third-party must consider the transfer given by the pharmaceutical company in the design of the optimal bonus. We examine the policy implications of a possible regulation of the transfer given by the pharmaceutical company. In Chapter 2, we run an experiment with students from three medical schools in Bogotá, Colombia, who face hypothetical patients and prescribe a brand or a generic version of the same molecule. We evaluate the effect of a cost-containment incentive to prescribe the generic drug in the presence of a gift to promote the brand drug prescription using eye-tracking technology. We study how these payments affect physicians' attention levels, using pupil dilation and visual fixations performed by the subjects as indices of attention related to cognitive effort. We find that receiving the containment incentive and the gift simultaneously is associated with more generic prescriptions and greater attention levels. We see the attention levels are greater when the subjects prescribe generic more frequently. Furthermore, the gift negatively affects generic prescriptions and attention levels. Last, we find that early exposure to the gift only affects attention levels. In Chapter 3, we propose a lab experiment to understand if environments of resource restrictions and uncertainty on the relative needs of future beneficiaries affects physi-cian's resource allocation decisions and how. When there are incentives to over-treat, we find that a patient tended by a constrained physician under uncertainty obtains higher benefits and receives allocations closer to her optimum than patients from physicians with no constraints or deciding under uncertainty alone. In addition, we observe a redistribution of resources when physicians decide with resource restrictions and uncertainty. In particular, when resources are scarce, physicians tend to allocate the limited services to patients with higher benefits in the absence of medical services, a higher capacity to benefit from the resources, the scantiest need for service units, and the lowest benefits at the optimum. Finally, we find that constraints, with or without complete information on patient characteristics, lead selfish physicians to approximate to what is best for the patient.