The effects of a patient shortage on general practitioners' future income and list of patients

The literature on physician-induced demand (PID) suffers from an inability to distinguish between the effect of better access and the effect of patient shortage. Data from the Norwegian capitation trial in general practice give us an opportunity to make this distinction and hence, study whether service provision by physicians is partly income-motivated. In the capitation trial, each general practitioner (GP) has a personal list of patients. The payment system is a mix of a capitation fee and a fee for service. The data set has information on patient shortage, i.e. a positive difference between a GP's preferred and actual list size, at the individual practice level. From a model of a GP's optimal choice we derive the GP's optimal practice profile contingent on whether the GP experiences a shortage of patients or not. To what extent GPs, who experience a shortage, will undertake measures to attract patients or embark on a service-intensive practice style depends on the costs of the various measures relative to their expected benefit. The model classifies GPs into five types. In the empirical analysis a panel of GPs is followed for 5 years. Hence, transitory effects should have been exhausted. We show that GPs who experience a shortage of patients have a higher income per listed person than their unrationed colleagues.