Physician Connectedness and Referral Choice*

Abstract

AbstractThis study examines the effects of social network structure of intermediaries in health care, namely referring physicians, upon the specialty treatment choices of patients in the United States. The social network of a referring physician is identified by the patient‐sharing pattern in Medicare claims data, and the following three measures are employed as key explanatory variables: (1) number of physicians connected (adjusted degree); (2) tightness of the network (clustering coefficient); and (3) influence of individual physicians in the network (eigenvector centrality). The results of discrete‐choice demand models suggest that if patients are referred by a physician who is a more important player in their social networks (i.e. eigenvector centrality is higher), the patient has a higher chance of choosing a surgeon of better quality.