Production of physician services

(1) Production of physician services
(2) The potential for substitution: nurse practitioners and family practice physicians
(3) Physician ownership and behavior
(1) Competition in physician services markets: What is the potential effect of retail
Lesson Objectives:
(1) To understand the basic economic model of production for physician services.
(2) To summarize the factors affecting the substitution potential between doctors and
nurse practitioners.
(3) To understand the impact of incentives on physician behavior.
(4) To identify and describe the basic features of a monopolistically competitive
market and to understand the reasons why the market for physician services is
often characterized in this way.
(5) To analyze how the entry of retail clinics will affect physician practices.
FGS 15
Thurston, N. and A. Libby. “A Production Function for Physician Services Revisited.”
Review of Economics and Statistics, 2002, 84(1): 184-191.
Casalino, Lawrence P., Sean Nicholson, David N. Gans, Terry Hammons, Dante Morra,
Theodore Karrison, and Wendy Levinson, 2009, “What Does It Cost Physician Practices
to Interact With Health Insurance Plans?” Health Affairs web exclusive, May 14, 2009:
*Baker, L. “Acquisition of MRI Equipment By Doctors Drives Up Imaging Use and
Spending.” Health Affairs, December 2010, 29(12), 2252-2259.
*Ashwood, J. R. Reid, C. Setodji, E. Weber, M. Gaynor, and A. Mehrotra. “Trends in Retail Clinic
Use Among the Commercially Insured.” American Journal of Managed Care, 2011, 17(11):
Supplemental Resources:
Reeves, L., R. Hermens, J. Braspenning, R. Grol, and B. Sibbald. “Substitution of doctors
by nurses in primary care (Review). The Cochrane Collaboration, 2007, Issue 3.
Accessed at:
Gruber, J. and M. Owings. “Physician financial incentives and cesarean section delivery.”
RAND Journal of Economics, 1996, 27(1): 99-123.
“Healthcare in the Express Lane: Retail Clinics go Mainstream,” California Health Care
Foundation, September 2007. Accessed at:
Retail Clinics: Facts, Trends, and Implications. Deloitte Consulting. Accessed at:

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