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Competition, Prices and Quality in the Market for Physician Consultations

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Hugh Gravelle & Anthony Scott & Peter Sivey & Jongsay Yong, 2013. "Competition, Prices and Quality in the Market for Physician Consultations," Melbourne Institute Working Paper Series wp2013n23, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2013n23
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Competition; prices; quality; doctors;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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