The importance of micro-data for revaealing income motivated behaviour among GPs

The objective of this paper is to demonstrate that micro data is fundamental for the study of income motivated behaviour among general practitioners (GPs). We argue that a GP who experiences a shortage of patients in a mixed capitation and fee for service payment system, is likely to have a more service intensive practice style than his unconstrained colleagues. If he cannot have his optimal number of patients, a second best is to increase the number of services per patient if the income per time unit of providing services is greater than the marginal valuation of leisure. An empirical test requires micro data of GPs' rationing status. Data from the Norwegian capitation experiment provide us with this opportunity. We find that the effect of patient shortage (strong rationing) on a GP's income from fees per patient is positive and statistically significant. Furthermore, we find that only the municipality with the lowest GP density has a negative and statistically significant effect. If only GP density data would have been available, we might erroneously have concluded that service provision among GPs is not income motivated. The reason is that aggregate data miss the within municipality variation in the actual number of patients relative to GPs' preferred numbers. We conclude that macro data of GP density in an area are not likely to be useful in this context because the effect of better access is often not distinguishable from the effect of physician initiated services.