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Should developing countries ban dual practice by physicians? Analysis under mixed hospital competition.

Indranil Dutta1, Mario Pezzino1, Yan Song2

  • 1Department of Economics, University of Manchester, Manchester, UK.

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Summary

Dual practice, allowing physicians to work in public and private hospitals, is socially beneficial. It reduces physician competition and increases service, though high competition may reduce hospital profits.

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developing countrieshospital competitionmixed oligopolyphysician dual practice

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Area of Science:

  • Health Economics
  • Healthcare Management
  • Game Theory

Background:

  • Dual practice, where physicians hold positions in both public and private healthcare sectors, is prevalent globally, especially in developing nations.
  • The competitive dynamics between hospitals for both patients and physicians influence the quality and quantity of medical services provided.
  • Understanding the implications of dual practice is crucial for optimizing healthcare resource allocation and patient outcomes.

Purpose of the Study:

  • To analyze the impact of dual practice on hospital financial performance (payoffs).
  • To evaluate how dual practice affects the level of physician services offered.
  • To determine the consequences of dual practice for overall societal welfare.

Main Methods:

  • A multi-stage game theory model was developed to simulate hospital competition.
  • The model incorporates endogenous physician service levels dependent on the competitive environment.
  • Analysis focused on comparing outcomes with and without dual practice policies.

Main Results:

  • Dual practice was found to be socially desirable, mitigating intense competition for physicians.
  • Physician service provision increases under dual practice arrangements.
  • However, in scenarios with high inter-hospital competition, dual practice may not maximize profits for either public or private hospitals.

Conclusions:

  • Dual practice offers significant societal benefits by improving physician service availability and reducing competition.
  • Healthcare policymakers should consider the nuanced effects of dual practice, balancing societal welfare with potential impacts on hospital profitability.
  • Further research may explore optimal regulatory frameworks for dual practice in diverse healthcare market structures.