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Competition, Prices and Quality in the Market for Physician Consultations

  • Hugh Gravelle

    (Centre for Health Economics, The University of York)

  • Anthony Scott

    ()

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

  • Peter Sivey

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

  • Jongsay Yong

    ()

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

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 tax-funded 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-of-pocket payment. GPs with more distant competitors also have shorter consultations, though the effect is small and statistically insignificant.

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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2013n23.

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Length: 37pp
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:iae:iaewps:wp2013n23
Contact details of provider: Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
Phone: +61 3 8344 2100
Fax: +61 3 8344 2111
Web page: http://www.melbourneinstitute.com/Email:


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  19. Elizabeth Savage & Glenn Jones, 2004. "An Analysis of the General Practice Access Scheme on GP Incomes, Bulk Billing and Consumer Copayments," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(1), pages 31-40, 03.
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