Competition and Physician Behaviour: Does the Competitive Environment Affect the Propensity to Issue Sickness Certificates?

Competition among physicians is widespread, but compelling empirical evidence on the impact on service provision is limited, mainly due to lack of exogenous variation in the degree of competition. In this paper we exploit that many GPs, in addition to own practice, work in local emergency centres, where the matching of patients to GPs is random. This allows us to observe the same GP in two different competitive environments; with competition (own practice) and without competition (emergency centre). Using rich administrative patient- level data from Norway for 2006-14, which allow us to estimate high-dimensional fixed-effect models to control for time-invariant patient and GP heterogeneity, we find that GPs with a fee-for-service (fixed-salary) contract are 12 (7.5) percentage points more likely to certify sick leave at own practice than at the emergency centre. Thus, competition has a positive impact on GPs’ sick listing that is strongly reinforced by financial incentives.