Economic Factors in the Use of Laboratory Tests by Office-Based Physicians

by Patricia Munch Danzon

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This report analyzes the effect of economic factors on the frequency, charges, and location of laboratory tests by office-based physicians. Section II develops a formal model of the economic factors affecting physician behavior in prescribing and charging for tests. Section III describes supply conditions in the independent clinical laboratory industry and the effects of regulation. Section IV analyzes the decision to do tests in-house and to adopt semiautomated techniques. The data are described in Sec. V. Section VI presents empirical estimates of determinants of the frequency of tests, the decision to do tests in-house and acquire an autoanalyzer, and the physician's fee for a complete blood count. The findings and policy implications are summarized in Sec. VII. The appendix presents an alternative model in which the office visit fee is proportional to the amount of time spent by the physician.

This report is part of the RAND Corporation Report series. The report was a product of the RAND Corporation from 1948 to 1993 that represented the principal publication documenting and transmitting RAND's major research findings and final research.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.