Information, Incentives and Uncertainty in Medical Decisions
Aggregate policy outcomes of costs and quality hinge on medical decisions made by physicians, but aside from a traditional focus on financial incentives, little is known about how health care providers make decisions under uncertainty and in an increasingly rich informational environment. This session examines mechanisms that impact health care delivery via provider decisions. The first paper studies the interaction between information technology and financial incentives, using data from the largest insurer in Hawaii. It explores a key point that despite the growing reliance on pay for performance, providers are often unaware of the details of financial incentives, and that information technology may make incentives more salient. The second paper estimates heterogeneous treatment effects using a rich administrative and clinical database to study how physicians tradeoff rules versus discretion. It demonstrates that while physicians make mistakes that rules could fix, they also observe more information that is potentially useful than simple rules incorporate. The third paper assesses a randomized intervention that has a potential to influence provider behavior through information and reminders. It provides an interesting template to further study health care delivery by randomized trials.