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Pre-condition for SID : GP payment system based on activities performed ( fee for service )

SUPPLY INDUCED DEMAND AND BEHAVIOUR OF GPs IN ITALY Amalia Donia Sofio Lara Gitto University of Roma “Tor Vergata”. Supplier Induced Demand (SID) : doctors tend to prescribe more than patients actually need, in order to maximise the benefit for themselves (i.e. income).

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Pre-condition for SID : GP payment system based on activities performed ( fee for service )

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  1. SUPPLY INDUCED DEMAND AND BEHAVIOUR OF GPs IN ITALYAmalia Donia SofioLara GittoUniversity of Roma “Tor Vergata”

  2. Supplier Induced Demand (SID): doctors tend to prescribe more than patients actually need, in order to maximise the benefit for themselves (i.e. income). Consequence: excessive consumption of inappropriate services, and increase in health expenditure. Donia Sofio A., Gitto L.Autore: Titolo presentazione

  3. Pre-condition for SID: GP payment system based on activities performed (fee for service) the doctors’ earnings are positively correlated to the number of cases dealt with. Increase in the number of doctors on the market reduction in the number of patients from each doctor, and, consequently, reduction in their incomes. To maintain income levels doctors induce demand for their services. Donia Sofio A., Gitto L.Autore: Titolo presentazione

  4. Limitations of the SID theory Empirical testing is the weak point of the theory: • - there is the practical impossibility of isolating the effects of induction from independent increases in demand; • moreover, doctors should be indifferent to induce demand if the remuneration method is other than fee for service (as in the case of GPs in various countries such as Italy). Donia Sofio A., Gitto L.Autore: Titolo presentazione

  5. Further motives for GP’s opportunistic behaviour • - indirect benefits, not necessarily pecuniary, which GPs may obtain; • - possibility for patients to change GP if their requests are not satisfied; • - lack of effective monitoring on GPs’ prescriptions. Recent studies on the topic (from the GP’s perspective): Delattre and Dormont (2000), Jiang and Begun (2002), Xirasagar and Lin Herng-Ching (2006). Donia Sofio A., Gitto L.Autore: Titolo presentazione

  6. Motivations of the paper In Italy, a GP’s income is mainly based on a per head quota (with a maximum number of patients). We want to verify if, although there is no fee for service, there could be SID by GPs. We test the correlation between: * number of GPs in relation to population and * various types of health services prescribed. A positive correlation means that a higher number of doctors corresponds to a greater recourse to health services Hence, there is induced demand by GPs. Donia Sofio A., Gitto L.Autore: Titolo presentazione

  7. Table 1 – Descriptive statistics (Regional data, year: 2003) Donia Sofio A., Gitto L.Autore: Titolo presentazione

  8. Donia Sofio A., Gitto L.Autore: Titolo presentazione

  9. Table 2: regional data on drug prescriptions Donia Sofio A., Gitto L.Autore: Titolo presentazione

  10. Table 3 – Number of GPs and health services per Region Donia Sofio A., Gitto L.Autore: Titolo presentazione

  11. Donia Sofio A., Gitto L.Autore: Titolo presentazione

  12. Figure 1:  Number of GPs per 10,000 inhabitants Source: processed data from the Ministry of Health Donia Sofio A., Gitto L.Autore: Titolo presentazione

  13. Figure 2:  Number of patients per GP Donia Sofio A., Gitto L.Autore: Titolo presentazione

  14. Figure 3:  Number of per capita prescriptions Donia Sofio A., Gitto L.Autore: Titolo presentazione

  15. Figure 4:  Per capita drug prescriptions Source: processed data from Federfarma. Donia Sofio A., Gitto L.Autore: Titolo presentazione

  16. Methodology The quantity demanded is a function of the price and of a vector of exogenous demand variables, Xd (Auster and Oaxaca, 1981): Qd = D (P, Xd) The quantity offered is a function of the price, of a vector W of exogenous variables regarding the price of the inputs and of a vector of exogenous supply variables, Xs. Qs = S (P, W, Xs) In equilibrium we have Qd = Qs = Q The SID hypothesis involves the quantity offered by the doctors being incorporated into the demand equation, with the result that: Qd = D (P, Xd, Qs) A positive variation in the offer will lead to an increase in demand. Donia Sofio A., Gitto L.Autore: Titolo presentazione

  17. Variables considered in the analysis The presence of SID was analysed by considering various types of health services. The dependent variables are: - the total number of medical services per capita; - the number of chemical, clinical, microbiological tests etc. per capita; - the number of diagnostic services per capita; - the number of services of rehabilitative medicine per capita; - the number of drug prescriptions per capita. Donia Sofio A., Gitto L.Autore: Titolo presentazione

  18. Variables considered in the analysis The main independent variable is the number of GPs/10,000 inhabitants. We also considered: - the level of per capita GDP (present in all the estimates); - the percentage of the population aged over 80 years. The estimates were repeated for each of the dependent variables. The last model estimated, regarding pharmaceutical assistance, also considers the average cost of the drugs prescribed in each prescription. Estimations have been carried out by applying OLS. Donia Sofio A., Gitto L.Autore: Titolo presentazione

  19. Results Donia Sofio A., Gitto L.Autore: Titolo presentazione

  20. Some comments on results • The dependent variable (number of health services per capita) is positive and almost always significantly correlated with the number of GPs. • → Hence, the higher the number of GPs, the higher the number of prescriptions for all types of services. • The sign of the coefficient for per capita GDP is negative and significant, especially for pharmaceutical prescriptions: at medium low levels of income, therefore, there is a greater prescription of drugs than of other types of services. Donia Sofio A., Gitto L.Autore: Titolo presentazione

  21. Some comments on results • Diagnostic services show a not significant correlation: this could be due to the circumstance that such services are usually suggested by a specialist, not by a GP. • Pharmaceutical assistance would display the highest levels of induction: drugs are the main treatment for the majority of medical conditions for which people consult their GP. • There is a negative correlation between the average value of drugs per prescription and the number of pharmaceutical prescriptions. Donia Sofio A., Gitto L.Autore: Titolo presentazione

  22. Other remarks for this study For further deepening of the analysis it could be possible: - to assess the average copayments on a regional basis (because not all regions apply prescription charges), eventually differentiating on the basis of population needs, exemptions and reimbursement levels; - to consider the costs for other health services (that differ often from region to region). Donia Sofio A., Gitto L.Autore: Titolo presentazione

  23. www.ceistorvergata.it/sanitaAmalia Donia SofioA.Donia@uniroma2.itLara GittoGitto@CEIS.uniroma2.it

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