What Factors Affect the Productivity and Efficiency of Physician Practices?

Medical Care, Vol. 48, No. 2, pp. 110-117, 2010

8 Pages Posted: 21 Dec 2011

See all articles by Jonathan Sunshine

Jonathan Sunshine

American College of Radiology

Danny R. Hughes

Harvey L. Neiman Health Policy Institute

Cristian Meghea

American College of Radiology - Research

Mythreyi Bhargavan

American College of Radiology

Date Written: February 20, 2010

Abstract

Background: Increasing the productivity and efficiency of physician practices could help relieve the rapid growth of U.S. healthcare costs and the expected physician shortage. Radiology practices are an attractive specific focus for research on practices’ productivity and efficiency because they are home to many purportedly productivity-enhancing operational technologies. This affords an opportunity to study the effect of production technology on physicians’ output. As well, radiology is a leader in the general movement of physicians out of very small practices. And imaging is far the fastest-growing category of physician expenditure.

Research Design: Using data from 2003 and 2007 surveys of radiologists, we estimate a stochastic frontier model to study the effects of practice characteristics, such as work hours, practice size, and output mix, and technologies used in work production, on practices’ productivity and efficiency.

Results: At the mean, the elasticities of output with respect to practice size and annual hours worked per full-time physician were 0.73 and 0.51, respectively. Some production technologies increase productivity by 15-20%; others generate no increase. Using “nighthawks” — i.e., contracting out after-hours work to external firms that consolidate workflow — significantly increases practice efficiency. Conclusions: The general U.S. trend toward larger practice size is unlikely to relieve cost or physician shortage pressures. The actual effect of purportedly productivity-enhancing operational technologies needs to be carefully evaluated before they are widely adopted. As the recently-developed innovations of nighthawks and hospitalists show, practices should give more attention to a possible choice to “buy,” rather than “make,” part of their output.

Keywords: productivity, efficiency, physician practices

JEL Classification: I1

Suggested Citation

Sunshine, Jonathan and Hughes, Danny R. and Meghea, Cristian and Bhargavan, Mythreyi, What Factors Affect the Productivity and Efficiency of Physician Practices? (February 20, 2010). Medical Care, Vol. 48, No. 2, pp. 110-117, 2010, Available at SSRN: https://ssrn.com/abstract=1974999

Jonathan Sunshine

American College of Radiology ( email )

Reston, VA
United States

Danny R. Hughes (Contact Author)

Harvey L. Neiman Health Policy Institute ( email )

1891 Preston White Drive
Reston, VA 20191
United States

Cristian Meghea

American College of Radiology - Research ( email )

Reston, VA

Mythreyi Bhargavan

American College of Radiology ( email )

1891 Preston White Dr
Reston, VA 20191
United States

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