Why do patients prefer hospital emergency visits? A nested multinomial logit analysis for patient-initiated contacts

This paper analyzes the nature of health care provider choice in the case of patient-initiated contacts, with special reference to a National Health Service setting, where monetary prices are zero and general practitioners act as gatekeepers to publicly financed specialized care. We focus our attention on the factors that may explain the continuously increasing use of hospital emergency visits as opposed to other provider alternatives. An extended version of a discrete choice model of demand for patient-initiated contacts is presented, allowing for individual and town residence size differences in perceived quality (preferences) between alternative providers and including travel and waiting time as non-monetary costs. Results of a nested multinomial logit model of provider choice are presented. Individual choice between alternatives considers, in a repeated nested structure, self-care, primary care, hospital and clinic emergency services. Welfare implications and income effects are analyzed by computing compensating variations, and by simulating the effects of user fees by levels of income. Results indicate that compensating variation per visit is higher than the direct marginal cost of emergency visits, and consequently, emergency visits do not appear as an inefficient alternative even for non-urgent conditions.