Int J Health Care Finance Econ (2011) 11:245–265 DOI 10.1007/s10754-011-9101-y Market conditions and general practitioners ’ referrals

Abstract We study how market conditions influence referrals of patients by general prac-titioners (GPs). We set up a model of GP referral for the Norwegian health care system, where a GP receives capitation payment based on the number of patients in his practice, as well as fee-for-service reimbursements. A GP may accept new patients or close the practice to new patients. We model GPs as partially altruistic, and compete for patients. We show that a GP operating in a more competitive market has a higher referral rate. To compete for patients and to retain them, a GP satisfies patients ’ requests for referrals. Furthermore, a GP who faces a patient shortage will refer more often than a GP who does not. Tests with Norwegian GP radiology referral data support our theory