Prescription behaviour of physicians in the public and private sector

Abstract

We analyse differences in the prescription behaviour of physicians in the public and private sector. We conduct the analysis in the context of diseases that are characterised by the availability of an effective, widely accepted low-cost treatment and alternative, more expensive treatments for the same condition. Specifically, we focus on two cases - treatment for high cholesterol and type 2 diabetes - that are both very important for public health and healthcare costs. We find that in both cases, physicians are significantly more likely to prescribe the expensive alternative in the private sector. The result holds after controlling for a wide variety of patient characteristics, including health indicators based on detailed administrative data. The results therefore indicate that similar patients receive different treatment depending on the sector they visit. In the case of diabetes, we further find that the same doctors prescribe different medication when working in different sectors. (Joint with Elina Jussila (Tampere University), Kaisa Kotakorpi (Tampere University and VATT) and Jouko Verho (VATT))