Population change and the regional distribution of physicians

Based on an intertermporal entry model of the physician market, we analyze how the supply of office-based physicians depends on regional character and on the age-structure of the local population as determinants of the current profitability of physician services, on local population change as a predictor of future demand, and on the extent of equilibrium adjustment within local markets. Using German regional data, we find that the number of general practitioners (GPs) per capita is positively related to the share of the population 60 and above within metropolitan areas, but negatively within rural areas. Future changes in list size have an impact on the current supply of GPs, suggesting limitations to equilibrium adjustment especially in regions with excess supply. Overall, population change should have raised the profitability of GP services over the period 1997–2008. The falling supply of GPs, especially in rural regions, then implies an increase in reservation income.