Physician Compensation Quality Supply of Medical Services

When is physician failure a good thing?

How do physicians learn?  A paper by Van Gestel, Muller, and Bosmans (2018) claims that the answer is through cumulative experience, economies of scale, or human capital depreciation.

Learning from cumulative experience refers to the idea that treating an additional patient generally improves physician (or team) performance. When referring to economies of scale, we capture the fact that higher volume providers usually have better infrastructure (e.g., equipment and staff) and more standardized procedures. Lastly, the human capital depreciation hypothesis states that provider performance decreases with longer temporal distance to previous procedures.

The article also posits another question: what happens when physicians fail.  Does failure lead to more learning and better performance?  Does it demoralize the physician and lead to worse outcomes?   Does it lead to more appropriate selection of patients who could benefit from the procedure?  Or does it make physicians cautious where they avoid many patients who could benefit from the treatment.

The authors examine Belgian data on transcatheter aorta valve implantation (TAVI) outcomes to try to answer this question. They use a variety of estimation techniques including fixed effects (FE) linear probability models (LPM), a FE logit model, and a bias-corrected FE which relies on bootstrapped samples and applies a split panel jackknife approach) and find the following:

…a previous death is significantly associated to decrease the probability of a subsequent patient death between 6% and 11% points. However, our results suggest that these effects are only short‐lived, and they do not shift the slope of the cumulative learning effects.

As Henry Ford said:

Failure is simply the opportunity to begin again, this time more intelligently.


  • Van Gestel R, Müller T, Bosmans J. Learning from failure in healthcare: Dynamic panel evidence of a physician shock effectHealth Economics2018;1–14.

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *