Variation in Specialist Physician Consultation Fees

Specialist physician fees in Australia are set at the discretion of the treating physician, guided only by a non-binding government schedule fee. Using administrative data on 5.8 million initial specialist consultations in 2023/24, we risk-adjust fees for patient characteristics and decompose the residual variance into physician, specialty, and regional components using a four-level random effects model. Accounting for patient risk factors reduce the fee variance by at most 5.3%. Physician-level variation accounts for 44.6%, specialty for 22.1%, and region for 3.8%; the ranking is broadly stable across six major specialties estimated separately. These results indicate that the fee dispersion of initial consultations, which is a schedule-priced, largely homogeneous service, is driven predominantly by physician-specific pricing discretion rather than by patient need, specialty norms, or geographic market conditions. We discuss implications for fee regulation and price transparency policy.