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Supply and demand in physician markets: a panel data analysis of GP services in Australia

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  • Ian McRae
  • James Butler

Abstract

To understand the trends in any physician services market it is necessary to understand the nature of both supply and demand, but few studies have jointly examined supply and demand in these markets. This study uses aggregate panel data on general practitioner (GP) services at the Statistical Local Area level in Australia spanning eight years to estimate supply and demand equations for GP services. The structural equations of the model are estimated separately using population-weighted fixed effects panel modelling with the two stage least squares formulation of the generalised method of moments approach (GMM (2SLS)). The estimated price elasticity of demand of $$-0.19$$ - 0.19 is comparable with other studies. The direct impact of GP density on demand, while significant, proves almost immaterial in the context of near vertical supply curves. Supply changes are therefore due to shifts in the position of the curves, partly determined by a time trend. The model is validated by comparing post-panel model predictions with actual market outcomes over a period of three years and is found to provide surprisingly accurate projections over a period of significant policy change. The study confirms the need to jointly consider supply and demand in exploring the behaviour of physician services markets. Copyright The Author(s) 2014

Suggested Citation

  • Ian McRae & James Butler, 2014. "Supply and demand in physician markets: a panel data analysis of GP services in Australia," International Journal of Health Economics and Management, Springer, vol. 14(3), pages 269-287, September.
    • Handle: RePEc:kap:ijhcfe:v:14:y:2014:i:3:p:269-287
    DOI: 10.1007/s10754-014-9148-7
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    2. Bin Zhu & Yang Fu & Jinlin Liu & Ying Mao, 2018. "Modeling the Dynamics and Spillovers of the Health Labor Market: Evidence from China’s Provincial Panel Data," Sustainability, MDPI, vol. 10(2), pages 1-20, January.
    3. Chun Yee Wong & Jessica Greene & Xenia Dolja‐Gore & Kees van Gool, 2017. "The Rise and Fall in Out‐of‐Pocket Costs in Australia: An Analysis of the Strengthening Medicare Reforms," Health Economics, John Wiley & Sons, Ltd., vol. 26(8), pages 962-979, August.
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    5. Bin Zhu & Chih-Wei Hsieh & Ying Mao, 2019. "Addressing the Licensed Doctor Maldistribution in China: A Demand-And-Supply Perspective," IJERPH, MDPI, vol. 16(10), pages 1-19, May.
    6. Elkins, Rosemary Kate & Schurer, Stefanie, 2017. "Introducing a GP copayment in Australia: Who would carry the cost burden?," Health Policy, Elsevier, vol. 121(5), pages 543-552.
    7. Russo, Giuliano & Rego, Inês & Perelman, Julian & Barros, Pedro Pita, 2016. "A tale of loss of privilege, resilience and change: the impact of the economic crisis on physicians and medical services in Portugal," Health Policy, Elsevier, vol. 120(9), pages 1079-1086.

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