Norman K. Thurston

A Production Function for Physician Services Revisited

We revisit Reinhardts (1972) commonly used production function for physician services. This production function, although appropriate in some settings, is not adequate for more detailed studies. The generalized linear production function (Diewart, 1971) is an attractive alternative for this application: it admits zero values for inputs and allows the estimation of complex technical relationships. We find that, from 1965-1988, the technical relationships that describe the production process for physician services are remarkably stable. By empirically estimating the parameters of this more general production function, we provide crucial evidence about the q-complementarity of health worker inputs, the first of its kind in the literature on health labor markets.

Racial Matching Among African-American and Hispanic Physicians and Patients

It is widely known that minority doctors have more patients of their own race and ethnicity than would be predicted by random distribution, but most measures of racial matching do not control for physician specialty, practice setting, or location. When we control for these variables, differences by doctors race are much smaller and, in many cases, not statistically significant, suggesting that simply increasing the number of minority physicians may not be the best way to increase access for under-served populations. However, we do find some evidence of culture-specific human capital (in the form of language ability) for Hispanics.

Effects of Managed Care Contracting on Physician Labor Supply

We examine the effect of managed care contracting on physician labor supply for office-based medical practices. We extend the standard labor supply model to incorporate choices regarding the patient base. Empirical tests use data from the 1985 and 1988 national HCFA Physician Practice Costs and Income Surveys and InterStudy Managed Care Surveys. We use physician-level information on participation in managed care contracting to estimate changes in work hours. Managed care contracting is generally associated with lower physician work hours. However, accounting for motivations to participate in contracts and the extent of contracting, the effect on hours is reduced in magnitude and significance. We conclude that relying on broad aggregate measures for policy analysis will likely be misleading as underlying motivations and contracting incentives change over time.

On the decline of employment-based health insurance in the US

Many recent papers have documented that there has been a steady decline in the fraction of workers in the US who receive health insurance through their employer. This paper presents an economic model of the labour market that is consistent with observed trends. The primary finding is that the trend is explained by a change in optimal compensation structures for workers due to the increase in the relative price of health care. The paper concludes with an application to the analysis of the increased prevalence of capitated contracts among employers.