Analyses of Physician Labor Supply Dynamics and its Effect on Patient Welfare

My dissertation focuses on the supply side of health and labor economics in order to inform policymakers who seek to address physician shortages and thus improve patient welfare in the United States. The first chapter evaluates the determinants of physician geographic and professional movement within North Carolina (NC) using a dynamic discrete choice model designed to analyze labor supply behaviors of individuals over time. I jointly model the initial specialty, activity, location, facility, and hours of direct patient care of all physicians in NC from 2003 to 2012 using a full information maximum likelihood estimation approach that allows for correlation of unobserved determinants. Using the parameter estimates from the dynamic model, I simulate several policy interventions aimed to attract and retain physicians in rural and underserved areas. I find that loan forgiveness policies are less effective at decreasing the probability of movement and increasing retention in the same rural county than an increase in the reimbursement rate. An increase in midlevel practitioners decreases retention in rural areas and increases the likelihood of a physician becoming inactive, while an increase in registered nurses in rural areas significantly increases physician retention. The second chapter evaluates the relationship between physician supply and patient welfare. Ambulatory care sensitive conditions (ACSC) are preventable or manageable with access to a primary care physician (PCP) and medication, but progression of ACSC tends to lead to costly hospitalizations. Results from existing literature on the causal effect of PCP supply on ACSC admissions are mixed. These mixed results can be explained by the endogeneity issue (i.e., the explanatory variable is correlated with the error term) that arise from simultaneous causality and omitted variables bias. This chapter addresses the endogeneity problem in the literature and correctly identify the true effect of PCP supply on patient welfare by using exogenous policies related to Health Professional Shortage Area (HPSA) designation at the county level. Using data from NC and Regression Discontinuity (RD) design, I find that a decrease in PCP supply leads to a significant increase in the number of the ACSC admissions, and vice versa.Doctor of Philosoph