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Competition, prices, and quality in the market for physician consultations

  • Hugh Gravelle

    (Centre for Health Economics, University of York, UK)

  • Anthony Scott

    (Melbourne Institute for Economic and Social Research, The University of Melbourne, Australia)

  • Peter Sivey

    (Melbourne Institute for Economic and Social Research, The University of Melbourne, Australia)

  • Jongsay Yong

    (Melbourne Institute for Economic and Social Research, The University of Melbourne, Australia)

Prices for consultations with General Practitioners (GPs) in Australia are unregulated, and patients pay the difference between the price set by the GP and a fixed reimbursement from the national taxfunded Medicare insurance scheme. We construct a Vickrey-Salop model of GP price and quality competition and test its predictions using a dataset with individual GP-level data on prices, the proportion of patients who are charged no out-of-pocket fee, average consultation length, and characteristics of the GPs, their practices and their local areas. We measure the competition to which the GP is exposed by the distance to other GPs and allow for the endogeneity of GP location decisions with measures of area characteristics and area fixed-effects. Within areas, GPs with more distant competitors charge higher prices and a smaller proportion of their patients make no out-ofpocket payment. GPs with more distant competitors also have shorter consultations, though the effect is small and statistically insignificant.

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File URL: http://www.york.ac.uk/media/che/documents/papers/researchpapers/CHERP89_competition_prices_quality_physician_consultations.pdf
File Function: First version, 2013
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Paper provided by Centre for Health Economics, University of York in its series Working Papers with number 089cherp.

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Length: 34 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:chy:respap:89cherp
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