Do Physicians Underutilize Aides

This paper utilizes a large national data set to retest the result found by Reinhardt that office-based physicians underutilize aides. Employing the transcendental-exponential form of the production function, it finds that groups are more productive than solos and that physicians typically do not use aides efficiently. Specifically, except for physician assistants used in groups, nonnurse aides were found to be overemployed. The policy implications are that for physicians to produce more efficiently, they must use fewer secretarial, administrative, and technician hours. A trend in this direction is already in evidence.