For a variety of firms, interactions with consumers can be conducted through in-person or virtual means, but how firms select different mediums is unclear. We examine this question using the market for almost all physician groups in the United States and their adoption of a telemedicine platform during the COVID-19 pandemic. We link detailed data on physician use of the telemedicine platform with mobility data from global positioning services (GPS) tracking services. Our combined data allows us to quantify physician-level substitution between in-person interactions with patients and virtual interactions. As a source of identifying variation, we leverage differential county-level exposure to the COVID-19 pandemic and related social distancing policies. Consistent with existing work, our first stage and reduced form results show large reductions in in-person visits and increases in use of telemedicine. Our instrumented results show an elasticity of approximately -0.2 between in-person and virtual care for all physicians located in the United States and an elasticity ranging from -1.0 to -0.3 for physicians who are regular users of the platform. Our results highlight how physician firms strategically adopt telemedicine in response to reductions in in-person demand for services.
Cantor, Jonathan H. and Christopher M. Whaley, The Doctor Will See You: Online Physician Transformations During COVID-19. Santa Monica, CA: RAND Corporation, 2021. https://www.rand.org/pubs/working_papers/WRA621-5.html.
Cantor, Jonathan H. and Christopher M. Whaley, The Doctor Will See You: Online Physician Transformations During COVID-19, RAND Corporation, WR-A621-5, 2021. As of January 11, 2023: https://www.rand.org/pubs/working_papers/WRA621-5.html