Market Conditions and General Practitioners’ Referrals
HERO WP 2009/8: Authors: Iversen, T., Ma, A., Institute of Health Management and Health Economics, Health Economics Research Programme, Department of Economics, Boston University, University of Oslo (PDF)
In this study the authors show how market conditions influence referrals of patients by general practitioners (GPs). They set up a model of GP referral for the Norwegian health care system, where a GP receives capitation payment based on the number of patients in his practice, as well as fee-for-service reimbursements. A GP may accept new patients or close the practice to new patients. The authors model GPs as partially altruistic, and compete for patients. They show that a GP operating in a more competitive market refers more. To retain patients in his practice, a GP satisfies patients’ requests for referrals.
Furthermore, a GP who faces patient shortage will refer more often than a GP who has enough patients. More referrals may add to profits from future treatments. Using data of radiology referrals by GPs in Norway, they test and confirm the theory.