MORE PHYSICIANS - IMPROVED AVAILABILITY OR INDUCED DEMAND

A number of empirical studies have shown that there is a negative asso ciation between population:physician ratio and utilization of medical services. However, it is not clear whether this relationship reflects supplier-inducement, the effect of lower prices on patient demand, a s upply response to variation in health status, or improved availability . In Norway, patient fees and state reimbursement fees are set central ly. Therefore, the correlation between utilization and population:phys ician ratio either reflects supplier-inducement, a supply response or an availability effect. We applied a theoretical model which distingui shed between an inducement and an availability effect. The model was i mplemented on a cross-sectional data set which contained information a bout patient visits and laboratory tests for all fee-for-service prima ry care physicians in Norway. Since population:physician ratio is pote ntially endogenous, an instrumental variable approach is used. We foun d no evidence for inducement either for number of visits or for provis ion of laboratory services. (C) 1998 John Wiley & Sons, Ltd.