Market Conditions and General Practitioners' Referrals

We study how market conditions in?uence referrals of patients by general practitioners (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 refers more. To retain patients in his practice, a GP satis?es patients' requests for referrals. Furthermore, a GP who faces patient shortage will refer more often than a GP who has enough patients. More referrals may add to pro?ts from future treatments. Using data of radiology referrals by GPs in Norway, we test and confirm our theory.