Go your own way? The importance of environment in the formation of physician practice styles

Variations in regional health care expenditures are sometimes attributed to discretion in physician’s treatment decisions. It is less clear how such discretion translates into changes in quality of care. This paper contributes to the recent literature on provider practice styles by studying the extent to which treatment heterogeneity arise from physician and environment-specific factors, respectively, and relate this to changes in patient outcomes. We adapt an empirical approach similar to that of Molitor (2016), exploiting cardiologist migration across hospital regions in the US, and use administrative data on all coronary catheterization procedures performed in Swedish hospitals 2004-2015, together with detailed information on patients’ clinical health. Results indicate that cardiologists rapidly and strongly adapt their treatment style to the new environment after relocating. This effect appears to be mainly driven by peers. Furthermore, we find no indication that the changes in practice style have important effects on the quality of care.