Scandinavian Working Papers in Economics

HERO Online Working Paper Series,
University of Oslo, Health Economics Research Programme

No 2003:1: The effect of patient shortage on general practitioners’ future income and list of patients

Tor Iversen ()
Additional contact information
Tor Iversen: Institute of Health Management and Health Economics, Postal: P.O. Box 1089 Blindern, NO-0317 Oslo, Norway

Abstract: The literature on supplier inducement suffers from inability to distinguish the effect of better access from the effect of patient shortage. Data from the Norwegian capitation trial in general practice give us an opportunity to make this distinction and hence, study whether service provision by physicians is income motivated. In the capitation trial each general practitioner (GP) has a personal list of patients. The payment system is a mix of a capitation fee and a fee for service. The data set has information on patient shortage, i.e. a positive difference between a GP’s preferred and actual list size, at the individual practice level. From a model of a GP’s optimal choice we derive the optimal practice profile contingent on whether a GP experiences a shortage of patients or not. To what extent GPs, who experience a shortage, will undertake measures to attract patients or embark on a service intensive practice style, depends on the costs of the various measures relative to their expected benefit. The model classifies GPs into five types. In the empirical analysis a panel of GPs is followed for five years. Hence, short-term effects due to transition to a new system should have been overcome. We show that even in the longer run, GPs who experience a shortage of patients have a higher income per listed person than their unrationed colleagues. This result is robust with regard to correction for potential selection bias based on observable and unobservable characteristics. We do not find any significant difference in income per listed person dependent on whether a rationed GP obtains an increase in the number of patients or not. A policy implication is that patient shortage is costly to the insurer because of income motivated behavior of unknown benefit to the patient.

Keywords: Economic motives; Capitation; General practice; Patient shortage; Service provision

JEL-codes: H42; I11; I18

30 pages, June 21, 2009

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