Incentives in U.S. Healthcare Operations

In my dissertation, I aim to understand incentives in U.S. healthcare operations based on my collaboration with various health organizations. In my first essay, I investigate the underlying operational and economic drives be-hind physicians ’ test-ordering behavior in an outpatient setting, motivated by a collabo-rative study with University of Pittsburgh Medical Center (UPMC) Eye Center. I model the physician-patient interaction under the strategic queueing framework, and show that insurance coverage is a key driving force of overtesting. Our further analysis reveals that simply expanding cost-sharing does not constitute the solution: (i) While existing studies hold that lower out-of-pocket expenses lead to higher consumption levels, we refine this statement by showing that the copayment and the coinsurance rate drive the consumption toward different directions. (ii) Setting a low reimbursement ceiling alone cannot elimi-nate overtesting. (iii) The joint effect of misdiagnosis concerns and insurance coverage can lead to both overtesting and undertesting even when there is no reimbursement ceiling. These and other results continue to hold under more general conditions and so are ro-