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Financial incentives and prescribing behaviour in primary care

Author

Listed:
  • Olivia Bodnar

    (DICE, Heinrich-Heine-University Düsseldorf, Germany)

  • Hugh Gravelle

    (Centre for Health Economics, University of York, York, UK.)

  • Nils Gutacker

    (Centre for Health Economics, University of York, York, UK.)

  • Annika Herr

    (Institute of Health Economics, Leibniz University Hannover, Germany)

Abstract
Many healthcare systems prohibit primary care physicians from dispensing the drugs they prescribe due to concerns that this encourages excessive, ineffective or unnecessarily costly prescribing. Using data from the English National Health Service for 2011 to 2018, we estimate the impact of physician dispensing rights on prescribing behaviour at the extensive margin (comparing practices that dispense and those that do not) and the intensive margin (comparing practices with different proportions of patients to whom they dispense). Our empirical strategy controls for practices selecting into dispensing based on observable (OLS, entropy balancing) and unobservable practice characteristics (2SLS). We show that physician dispensing raises drug costs per patient by 4.2%, which reflects more and more expensive drugs being prescribed, including potentially inappropriate substances such as opioids. Dispensing practices also prescribe smaller packages as reimbursement is partly based on a fixed fee per prescription dispensed. Similar effects are observed at the intensive margin.

Suggested Citation

  • Olivia Bodnar & Hugh Gravelle & Nils Gutacker & Annika Herr, 2021. "Financial incentives and prescribing behaviour in primary care," Working Papers 181cherp, Centre for Health Economics, University of York.
    • Handle: RePEc:chy:respap:181cherp
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    File URL: https://www.york.ac.uk/media/che/documents/papers/researchpapers/CHE_RP181_physician_dispensing.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Stacherl, Barbara & Renner, Anna-Theresa & Weber, Daniela, 2023. "Financial incentives and antibiotic prescribing patterns: Evidence from dispensing physicians in a public healthcare system," Social Science & Medicine, Elsevier, vol. 321(C).

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    More about this item

    Keywords

    Physician dispensing; primary care; drug expenditure; financial incentives; physician agency;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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