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Fixed fees and physician-induced demand: A panel data study on French physicians

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  • Eric Delattre

    (Thema, Université de Cergy-Pontoise, France)

  • Brigitte Dormont

    (Thema, Université Paris X-Nanterre, France and IEMS, Lausanne, Switzerland)

Abstract

This paper investigates on the existence of physician-induced demand (PID) for French physicians. The test is carried out for GPs and specialists, using a representative sample of 4500 French self-employed physicians over the 1979-1993 period. These physicians receive a fee-for-services (FFS) payment and fees are controlled. The panel structure of our data allows us to take into account unobserved heterogeneity related to the characteristics of physicians and their patients. We use generalized method of moments (GMM) estimators in order to obtain consistent and efficient estimates. We show that physicians experience a decline of the number of consultations when they face an increase in the physician:population ratio. However this decrease is very slight. In addition, physicians counterbalance the fall in the number of consultations by an increase in the volume of care delivered in each encounter. Econometric results give a strong support for the existence of PID in the French system for ambulatory care. Copyright © 2003 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 12 (2003)
Issue (Month): 9 ()
Pages: 741-754

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Handle: RePEc:wly:hlthec:v:12:y:2003:i:9:p:741-754

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
  2. Rochaix, Lise, 1989. "Information asymmetry and search in the market for physicians' services," Journal of Health Economics, Elsevier, Elsevier, vol. 8(1), pages 53-84, March.
  3. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  4. McGuire, Thomas G., 2000. "Physician agency," Handbook of Health Economics, Elsevier, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 9, pages 461-536 Elsevier.
  5. Grytten, Jostein & Sorensen, Rune, 2001. "Type of contract and supplier-induced demand for primary physicians in Norway," Journal of Health Economics, Elsevier, Elsevier, vol. 20(3), pages 379-393, May.
  6. Ellis, Randall P. & McGuire, Thomas G., 1990. "Optimal payment systems for health services," Journal of Health Economics, Elsevier, Elsevier, vol. 9(4), pages 375-396, December.
  7. Folland, Sherman & Stano, Miron, 1989. "Sources of small area variations in the use of medical care," Journal of Health Economics, Elsevier, Elsevier, vol. 8(1), pages 85-107, March.
  8. Fredrik Carlsen & Jostein Grytten, 1998. "More physicians: improved availability or induced demand?," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 7(6), pages 495-508.
  9. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  10. Rune J. S�rensen & Jostein Grytten, 1999. "Competition and supplier-induced demand in a health care system with fixed fees," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 8(6), pages 497-508.
  11. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0151, National Bureau of Economic Research, Inc.
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  13. Dranove, David & Wehner, Paul, 1994. "Physician-induced demand for childbirths," Journal of Health Economics, Elsevier, Elsevier, vol. 13(1), pages 61-73, March.
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