An economic model of physician care utilization is
developed that incorporates the uncertainty and practice style hypotheses of
Wennberg and others as explanations of the substantial intermarket variations in
per capita utilization rates of various medical and surgical procedures.
Practice style is modeled as a set of physician beliefs regarding the production
function of health. Per capita utilization is decomposed in the model into a
first occurrences demand and an intensity demand. It is argued that the
influence of practice style affects the intensity with which physicians treat
patients. Alternative tests are carried out on a comprehensive aggregated
measure of physician care utilization for market areas in Michigan. Although
practice is important for some individual procedures, empirical results suggest
that it is unimportant in determining either an aggregated index of market area
utilization or the average intensity with which patients are treated by
physicians.
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