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Physician Dual Practice: Access Enhancement or Demand Inducement?

  • Anupa Bir
  • Karen Eggleston

In many developing countries, the majority of physicians employed in government clinics also have a private practice. We develop a simple model to show that allowing dual practice helps low-income governments retain skilled physicians to assure patient access. If dual-practice providers differentially refer higher-income patients to private practice, public funding becomes more effectively targeted on the poor. Yet dual practice physicians may also skimp on effort, pilfer supplies, and induce demand. Patterns of care-seeking in Indonesia, especially disproportionate use of private providers by the urban poor, are consistent with exacerbated incentive for physician self-referral to private practice in urban areas.

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File URL: http://ase.tufts.edu/econ/papers/200311.pdf
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Paper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 0311.

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Date of creation: 2003
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Handle: RePEc:tuf:tuftec:0311
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Web page: http://ase.tufts.edu/economics

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  1. McGuire, Thomas G. & Pauly, Mark V., 1991. "Physician response to fee changes with multiple payers," Journal of Health Economics, Elsevier, vol. 10(4), pages 385-410.
  2. Christina H. Paxson & Nachum Sicherman, 1994. "The Dynamics of Dual-Job Holding and Job Mobility," NBER Working Papers 4968, National Bureau of Economic Research, Inc.
  3. Dranove, David & Satterthwaite, Mark A., 2000. "The industrial organization of health care markets," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 20, pages 1093-1139 Elsevier.
  4. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  5. Leonard, K.L., 2000. "African Traditional Healers and Outcome-Contingent Contracts in Health Care," Discussion Papers 2000_03, Columbia University, Department of Economics.
  6. David M. Cutler, 2002. "Equality, Efficiency, and Market Fundamentals: The Dynamics of International Medical-Care Reform," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 881-906, September.
  7. Lang, Kevin, 1994. "Does the Human-Capital/Educational-Sorting Debate Matter for Development Policy?," American Economic Review, American Economic Association, vol. 84(1), pages 353-58, March.
  8. Sean Nicholson & Nicholas S. Souleles, 2002. "Physician Income Prediction Errors: Sources and Implications for Behavior," NBER Working Papers 8907, National Bureau of Economic Research, Inc.
  9. Mark Pauly, 1980. "Doctors and Their Workshops: Economic Models of Physician Behavior," NBER Books, National Bureau of Economic Research, Inc, number paul80-1.
  10. McGuire, Thomas G., 2000. "Physician agency," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 9, pages 461-536 Elsevier.
  11. Thomas G. McGuire & Mark V. Pauly, 1991. "Physician Response to Fee Changes with Multiple Payers," Papers 0015, Boston University - Industry Studies Programme.
  12. Mitchell, Jean M. & Sass, Tim R., 1995. "Physician ownership of ancillary services: Indirect demand inducement or quality assurance?," Journal of Health Economics, Elsevier, vol. 14(3), pages 263-289, August.
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