The effect of distance to provider on employee response to changes in mental health benefits

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Abstract
We assess whether distance to provider moderates the effect of a change in mental health benefits on treatment initiation of employees of a large US‐based company for psychiatric disorders. Mental health treatment administrative claims data plus eligibility information provided by a Fortune 50 company for the years 1995–1998 are used for the analysis. The effect of distance is measured using the relative effect of the initiative on residents living far from providers compared to those living close to providers. We model the probability of treatment initiation using a random effects logit specification. We find that the effect of distance to provider has the potential to over‐shadow other incentives to initiate treatment, especially at distances greater than 4 miles. These results lend further support to the notion that geographic dispersion of providers should be an important consideration when forming a selective contracting network. Copyright © 2006 John Wiley & Sons, Ltd.