Supplier inducement in a public health care system

The present paper examines whether supplier inducement exists for primary physicians' services in Norway. Our model assumes optimization behavior of the physician. The research design is adapted to the institutional setting of Norwegian primary physician services, where there is a fixed fee schedule. According to our model, the physician has three choices: to rational services, to supply an optimal amount of services, or to induce demand for services. The analyses revealed no indication of inducement with respect to physician-initiated visits. However, supplier inducement effects were found for provision of laboratory tests.