AN EQUILIBRIUM MODEL OF THE MARKET FOR PHYSICIAN SERVICES (HEALTH ECONOMICS)

The equilibrium model of the market for physician services provides a framework for quantitatively analyzing the effects of exogenous factors on the market for physician services in a competitive economic framework. The application of the equilibrium model to the market for physician services involves three steps: developing a model of the market for physician services, estimating the coefficients of the model, and conducting experiments. The experiments involve altering the parameters of the model that correspond to the factors of interest and computing the resulting equilibrium prices and quantities of services.; The equilibrium model is composed of models of physician and consumer behavior and a definition of the market equilibrium. The specific forms of the models are systems of physician supply and consumer demand functions derived from the Transcendental Logarithmic indirect utility function. Separate functions are estimated for each classification of consumers and physicians for whom preferences are likely to differ.; The experiments which comprise this application of the equilibrium model analyze the effects of three factors on the economic behavior of the market for primary care physician visits: the age distribution of the population, the supply of physicians, and copayment rates for physician services. The equilibrium model experiments provide insights into the behavior of the market that linear models, typically used to study the market, have not provided. For example, the physician supply experiments show that total expenditures for some types of primary care physician visits are positively related to the physician supply, while total expenditures for other types of visits are inversely related to physician supply.