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Competitive behavior in local physician markets.

M Brasure1, S C Stearns, E C Norton

  • 1University of Minnesota, USA.

Medical Care Research and Review : MCRR
|December 10, 1999
PubMed
Summary
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Physician competition may be feasible in rural areas. Studies show that population increments needed for a second physician drop significantly, stabilizing at 3-5 providers, which is achievable for most of the US population.

Area of Science:

  • Health Economics
  • Healthcare Market Analysis
  • Physician Market Dynamics

Background:

  • Competition is often considered a cost-control mechanism in healthcare.
  • However, physician competition is limited in rural areas due to fewer providers.
  • Understanding physician entry patterns is crucial for assessing market competition.

Purpose of the Study:

  • To analyze physician entry behavior in local markets.
  • To determine the physician supply levels consistent with competitive behavior.
  • To assess the feasibility of physician competition in rural areas.

Main Methods:

  • Utilized the empirical framework by Bresnahan and Reiss.
  • Analyzed physician entry patterns using longitudinal data.

Related Experiment Videos

  • Focused on total and specialty physicians in nonmetropolitan health service areas.

    • Main Results:

    • A notable drop in population increments was observed for the second physician's entry.
    • Population increments stabilized at three to five physicians for subsequent entries.
    • Over 93% of the US population resides in areas supporting this physician supply.

    Conclusions:

    • The unattractiveness of being a solo physician may explain the initial entry pattern.
    • Rural areas can potentially support competitive physician markets.
    • Mechanisms like managed care may be feasible given the observed physician supply levels.