Supplier Inducement in the Belgian Primary Care Market

Abstract

We address the presence of supplier-induced demand in the Belgian primary care market, which is characterized by a fixed fee system and a high density of General Practitioners (GP). Using a unique dataset on the number of visits of all Belgian GPs, we first investigate whether we can find evidence of demand inducement by Belgian GPs. Novel to this literature is that we furthermore investigate which type of visits GPs typically use for inducing demand.

We extend the theoretical framework of Carlsen and Grytten (1998) to allow for a limitation in the possibility of inducing demand due to the amount of information in the market. As a result, our model predicts GPs to induce demand when the level of competition becomes high, while a further increase of competition triggers a decrease in their inducing behavior.

The results indicate the presence of both availability effects and supplier inducement in the Belgian primary care market. We also find that GPs prefer the use of home visits during working hours to induce demand for their services. However, when competition gets fierce, they substitute toward inducement through office visits.

Keywords: upplier induced demand, GP, Belgium