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Supply and demand in physician markets: a panel data analysis of GP services in Australia.

McRae I, Butler JR - Int J Health Care Finance Econ (2014)

Bottom Line: The direct impact of GP density on demand, while significant, proves almost immaterial in the context of near vertical supply curves.The model is validated by comparing post-panel model predictions with actual market outcomes over a period of three years and is found to provide surprisingly accurate projections over a period of significant policy change.The study confirms the need to jointly consider supply and demand in exploring the behaviour of physician services markets.

View Article: PubMed Central - PubMed

Affiliation: Australian Primary Health Care Research Institute, Australian National University, Building 63, Cnr Mills and Eggleston Roads, Acton, Canberra, ACT , 0200, Australia, ian.s.mcrae@anu.edu.au.

ABSTRACT
To understand the trends in any physician services market it is necessary to understand the nature of both supply and demand, but few studies have jointly examined supply and demand in these markets. This study uses aggregate panel data on general practitioner (GP) services at the Statistical Local Area level in Australia spanning eight years to estimate supply and demand equations for GP services. The structural equations of the model are estimated separately using population-weighted fixed effects panel modelling with the two stage least squares formulation of the generalised method of moments approach (GMM (2SLS)). The estimated price elasticity of demand of [Formula: see text] is comparable with other studies. The direct impact of GP density on demand, while significant, proves almost immaterial in the context of near vertical supply curves. Supply changes are therefore due to shifts in the position of the curves, partly determined by a time trend. The model is validated by comparing post-panel model predictions with actual market outcomes over a period of three years and is found to provide surprisingly accurate projections over a period of significant policy change. The study confirms the need to jointly consider supply and demand in exploring the behaviour of physician services markets.

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Outline of the GP model (Standard text endogenous variables, italicized text exogenous variables. Dashed lines indicate relationship between endogenous variables.)
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Fig2: Outline of the GP model (Standard text endogenous variables, italicized text exogenous variables. Dashed lines indicate relationship between endogenous variables.)

Mentions: The model estimated in this paper is a system of supply and demand equations for GP services that reflects the important design features of the national health insurance scheme in Australia. The general relationships between supply, demand, prices and health that are endogenous components of the model are summarised in Fig. 2. Of particular note are the following points. First, supply comprises two components: numbers of GPs, and the number of services provided per GP. This identifies two distinct processes, as government can control GP numbers to a degree but each GPs chooses the number of services he/she will provide. Second, health is treated as endogenous in the demand equation as the level of GP services provided in an area may influence the health of the area.Fig. 2


Supply and demand in physician markets: a panel data analysis of GP services in Australia.

McRae I, Butler JR - Int J Health Care Finance Econ (2014)

Outline of the GP model (Standard text endogenous variables, italicized text exogenous variables. Dashed lines indicate relationship between endogenous variables.)
© Copyright Policy - OpenAccess
Related In: Results  -  Collection

Show All Figures
getmorefigures.php?uid=PMC4125822&req=5

Fig2: Outline of the GP model (Standard text endogenous variables, italicized text exogenous variables. Dashed lines indicate relationship between endogenous variables.)
Mentions: The model estimated in this paper is a system of supply and demand equations for GP services that reflects the important design features of the national health insurance scheme in Australia. The general relationships between supply, demand, prices and health that are endogenous components of the model are summarised in Fig. 2. Of particular note are the following points. First, supply comprises two components: numbers of GPs, and the number of services provided per GP. This identifies two distinct processes, as government can control GP numbers to a degree but each GPs chooses the number of services he/she will provide. Second, health is treated as endogenous in the demand equation as the level of GP services provided in an area may influence the health of the area.Fig. 2

Bottom Line: The direct impact of GP density on demand, while significant, proves almost immaterial in the context of near vertical supply curves.The model is validated by comparing post-panel model predictions with actual market outcomes over a period of three years and is found to provide surprisingly accurate projections over a period of significant policy change.The study confirms the need to jointly consider supply and demand in exploring the behaviour of physician services markets.

View Article: PubMed Central - PubMed

Affiliation: Australian Primary Health Care Research Institute, Australian National University, Building 63, Cnr Mills and Eggleston Roads, Acton, Canberra, ACT , 0200, Australia, ian.s.mcrae@anu.edu.au.

ABSTRACT
To understand the trends in any physician services market it is necessary to understand the nature of both supply and demand, but few studies have jointly examined supply and demand in these markets. This study uses aggregate panel data on general practitioner (GP) services at the Statistical Local Area level in Australia spanning eight years to estimate supply and demand equations for GP services. The structural equations of the model are estimated separately using population-weighted fixed effects panel modelling with the two stage least squares formulation of the generalised method of moments approach (GMM (2SLS)). The estimated price elasticity of demand of [Formula: see text] is comparable with other studies. The direct impact of GP density on demand, while significant, proves almost immaterial in the context of near vertical supply curves. Supply changes are therefore due to shifts in the position of the curves, partly determined by a time trend. The model is validated by comparing post-panel model predictions with actual market outcomes over a period of three years and is found to provide surprisingly accurate projections over a period of significant policy change. The study confirms the need to jointly consider supply and demand in exploring the behaviour of physician services markets.

Show MeSH