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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.

Show MeSH
Estimated annual supply curves for 1996–2003 and demand curves for 1996 and 2003 (average gross prices in Australian dollars, 1996 prices)
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Fig3: Estimated annual supply curves for 1996–2003 and demand curves for 1996 and 2003 (average gross prices in Australian dollars, 1996 prices)

Mentions: Figure 3 illustrates supply curves for each year for the time period covered by the study (1996–2003). As the fixed effects model assumes coefficients do not change over time, the slopes in the GP density and the services per GP curves apply each year. Using the relevant values for each year, overall relationships between price and supply are derived, giving a series of backward-bending supply curves which are upward sloping across most of the plausible average gross fee range, and which shift to the left over time. The shift is due to the combination of changes in the overall GP density and the trend in services per GP.Fig. 3


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)

Estimated annual supply curves for 1996–2003 and demand curves for 1996 and 2003 (average gross prices in Australian dollars, 1996 prices)
© Copyright Policy - OpenAccess
Related In: Results  -  Collection

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

Fig3: Estimated annual supply curves for 1996–2003 and demand curves for 1996 and 2003 (average gross prices in Australian dollars, 1996 prices)
Mentions: Figure 3 illustrates supply curves for each year for the time period covered by the study (1996–2003). As the fixed effects model assumes coefficients do not change over time, the slopes in the GP density and the services per GP curves apply each year. Using the relevant values for each year, overall relationships between price and supply are derived, giving a series of backward-bending supply curves which are upward sloping across most of the plausible average gross fee range, and which shift to the left over time. The shift is due to the combination of changes in the overall GP density and the trend in services per GP.Fig. 3

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