QUALITY OF SERVICES AND DEMAND FOR HEALTH-CARE IN NIGERIA - A MULTINOMIAL PROBIT ESTIMATION

Household data are combined with data on prices and quality of care, c ollected directly from facilities, to estimate the demand for outpatie nt health care. Many of the statistical problems of demand estimation with micro level data are avoided by an innovation-the first use of th e multinomial probit estimation method for health demand. A separate b ut related problem, that the price data used in such studies an usuall y endogenous (in fact usually are expenditures, which are to a great d egree determined by the actual care choice) is avoided by the collecti on of a specific exogenous price variable directly from the health pro viders. Because the health care 'good'-outpatient health care-can vary to such a degree across providers, quality of care must be controlled in order that the coefficients on prices and other variables will not be biased. A strong circumstantial case can be made that past estimat ion efforts probably underestimated the impact of prices of care on pr ovider choices, because those providers charging higher prices also te nd to provide higher quality care and those charging lower prices to p rovide care of lower quality. Because of this fear of bias on the extr emely important price coefficient, effective control of the quality of the care available at the alternative accessible care providers is al most certainly at this time the most important marginal innovation to demand estimation. Most past researchers simply have not had available to them exogenous quality of care information collected via a facilit y (provider) survey. This study tried several health care provider qua lity variables and finally used three distinct variables which were st atistically significant: (a) expenditure per person in population serv ed; (b) percentage of times drugs are available; and (c) interviewers evaluation of the physical condition of the facility. Price of a visit to the facility is also included, and also is an exogenous variable c ollected directly from the alternative available providers. For the va riables of most interest for this study, price and quality of care, th e results are quite reasonable and much as expected. It is seen that h igher prices at either type of facility will tend to reduce usage of t hat type, and that usage will tend to increase for each type of care a s the quality of the care is increased. The results also indicate no d ifference in the price responsiveness of different income groups.