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Raising the Stakes: Physician Facility Investments and Provider Agency

Elizabeth L. Munnich et al.

The American Economic Review2026https://doi.org/10.1257/aer.20211324article
FT50AJG 4*ABDC A*
Weight
0.50

Abstract

Principal-agent problems often extend beyond what can be directly addressed through conventional incentive arrangements. We examine a context where physicians are likely under-incentivized to minimize total medical costs until their private financial interests align with those of patients. Leveraging novel data on physician ownership of ambulatory surgery centers——that is, same-day facilities——we show that these equity holdings cause a substitution away from higher cost, rival settings that lowers Medicare spending by 10–40 percent per physician. We find no clear evidence of perverse behavior following these investments. Instead, our findings demonstrate how entrepreneurial activity can indirectly limit principal-agent problems and improve efficiency. (JEL D82, D91, G51, I11, I18, L84)

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https://doi.org/https://doi.org/10.1257/aer.20211324

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@article{elizabeth2026,
  title        = {{Raising the Stakes: Physician Facility Investments and Provider Agency}},
  author       = {Elizabeth L. Munnich et al.},
  journal      = {The American Economic Review},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1257/aer.20211324},
}

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Raising the Stakes: Physician Facility Investments and Provider Agency

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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