Physician Agency
A central empirical fact motivating the study of physician agency is the substantial variation in healthcare utilization and spending across geographic areas and providers. Early work documenting small-area variation showed that patients with similar observable characteristics receive markedly different levels and types of care depending on where they live and which physicians they see (J. Wennberg and Gittelsohn (1973); J. E. Wennberg, Fisher, and Skinner (2004)). While some of this variation reflects differences in patient health and preferences, a large literature demonstrates that supply-side factors play an important role, raising questions about how treatment decisions are made in environments characterized by asymmetric information and physician discretion.
Physician agency provides a unifying framework for understanding these patterns. Physicians act as agents for patients, but they typically have discretion over diagnostic and treatment choices and face incentives that may not be perfectly aligned with patient welfare. Classic conceptual work formalizes this agency problem and emphasizes how physician objectives, information, and institutional constraints shape care delivery (McGuire (2000)). More recent empirical research builds on this framework to quantify the extent to which physicians contribute to observed variation in healthcare use, often exploiting patient or physician mobility to separate demand-side factors from physician practice styles (Finkelstein, Gentzkow, and Williams (2016); Badinski et al. (2023)).
Together, this body of work highlights physician agency as a key mechanism linking institutional features of healthcare markets to real differences in treatment intensity and patient outcomes. It also provides a foundation for subsequent discussions of how financial and non-financial incentives, as well as organizational structure, shape physician behavior.
Potential papers for presentation today include:
- Finkelstein, Gentzkow, and Williams (2016) — separating demand- and supply-side sources of healthcare variation
- Badinski et al. (2023) — the role of physicians in explaining geographic variation in utilization