Practice Location Choice by New Physicians: The Importance of Malpractice Premiums, Damage Caps, and Health Professional Shortage Area Designation

Abstract

To understand the factors affecting the choice of initial practice location by new physicians. A unique survey of exiting medical residents in New York State from 1998 to 2003. We estimate conditional logit models to examine the factors affecting the choice of initial practice location by new physicians. We identify all physicians completing their training in obstetrics/gynecology or surgery and primary care physicians (PCPs) (general internal medicine, pediatrics, and family medicine) who had accepted a job in patient care and who provided the location (zip code) of their job. This resulted in 3,758 physicians in our sample. Our results indicate that malpractice insurance premiums are a significant deterrent for surgeons, but they do not appear to deter OB/GYNs or PCPs from locating in particular areas. In addition, caps on malpractice damage awards attract surgeons to areas. Shortage area designations attract PCPs without education debt yet deter PCPs with debt, suggesting that subsidies do not outweigh the perceived costs of locating in underserved areas. In general our results highlight that new physicians are sensitive to the characteristics of the locations in which they could potentially locate when beginning their careers in patient care.