Physician induced demand for cesarean sections: does the convenience incentive matter?

This paper investigates whether physicians induce demand for C-sections in the days preceding leisure periods. I reject that doctors are meaningfully increasing the number of cesareans to accommodate their own preferences for control of deliveries around leisure periods. Using Thomson Reuters MarketScan Commercial Claims® and Encounters database for years 2008 to 2011, I analyzes delivery modes on a sample of more than 1,300,000 deliveries. I can precisely estimate that the induced demand due to convenience is close to zero. While I replicate previous results of lower C-section rates on leisure periods, I show that they are due to the way doctors schedule planned cesareans rather than to an induced demand for reason of physicians' convenience.

I use three different strategies to show the absence of induced demand for C-sections due to convenience. First, I take advantage of the fact that most public holidays in the US are decided at the state level. Hence I can compare the probability of C-section on the same day in states where a holiday is observed with states where no holiday is observed. I show that the probability of C-section is lower on holiday Mondays than on a regular Mondays. Nevertheless, the probability of C-section in a given period of time preceding and including a holiday Monday is not different from the probability in regular periods. This means that the C-sections that are not performed on the holiday Monday are simply advanced or postponed to other periods. But doctors do not induce more demand for C-section when a holiday Monday is approaching, or if they do, the magnitude of the effect is very small.

Second, I use the same reasoning to show that the increase of the probability of C-section in the days preceding the weekend does not compensate for the decrease during the weekend. It means that the higher rate of C-sections observed on weekdays is due to a displacement of the C-sections that cannot occur on the weekend, but not to an induced demand for surgery.

Third, I get rid of the scheduling effect by focusing only on unscheduled C-sections. Following previous literature, I define them as the ones due to long labor or to fetal distress. For these particular deliveries, the probability of C-section on weekend and on holiday Mondays is not different from the one on regular days. The negative effect of leisure periods disappears for unplanned C-sections, providing further evidence that the leisure period impact is due to the scheduling effect.

This paper provides the first piece of evidence against the commonly admitted statement that physicians induce demand for C-sections in the days preceding leisure periods. Even if the claim that the rate of C-sections is higher in period preceding leisure is verified, it is due to the way doctors schedule the surgery and does not seem to be caused by a physician induced demand for C-sections.