The European Journal of Health Economics

, Volume 9, Issue 2, pp 117–125 | Cite as

Primary physicians’ response to changes in fees

  • Jostein GryttenEmail author
  • Fredrik Carlsen
  • Irene Skau
Original paper


The study examines how the service production of primary physicians in Norway is influenced by changes in fees. The data represent about 2,650 fee-for-service physicians for the years 1995–2000. We constructed a variable that made it possible to estimate income effects of fee changes on service levels. Service production was measured by the number of consultations per physician, the number of laboratory tests per consultation and the proportion of consultations lasting more than 20 min. Our main finding is that fee changes have no income effect on service production. Our results imply that fee regulation can be an effective means of controlling physicians’ income, and therefore government expenditure, on primary physician services.


Primary physicians Consultations Fees Income effect 



We wish to thank Linda Grytten for translating the original manuscript to English.


  1. 1.
    Holahan, J., Scanlon, W.: Price controls, physician fees, and physician incomes from Medicare and Medicaid. The Urban Institute, Washington DC (1978)Google Scholar
  2. 2.
    Holahan, J., Dor, A., Zuckerman, S.: Understanding the recent growth in Medicare physician expenditures. J. Am. Med. Assoc. 263, 1658–1661 (1990)CrossRefGoogle Scholar
  3. 3.
    Rice, T.H.: The impact of changing Medicare reimbursement rates on physician-induced demand. Med. Care 21, 803–815 (1983)CrossRefGoogle Scholar
  4. 4.
    Christensen, S.: Volume responses to exogenous changes in Medicare’s payment policies. Health Serv. Res. 27, 65–79 (1992)Google Scholar
  5. 5.
    Mitchell, J.B., Wedig, G., Cromwell, J.: The Medicare fee freeze: What really happened?. Health Aff. 8, 21–32 (1989)CrossRefGoogle Scholar
  6. 6.
    Rochaix, L.: Joint price quantity regulation in the market for physicians’ services: The Quebec experiment. In: Incentives in Health Systems. Springer, New York (1990)Google Scholar
  7. 7.
    Rice, T., McCall, N.: Changes in Medicare reimbursement in Colorado: Impact on physicians’ economic behavior. Health Care Financ. Rev. 3, 67–86 (1982)Google Scholar
  8. 8.
    Schwartz, M., Martin, S., Cooper, D.: The effect of a thirty percent reduction in physician fees on Medicaid surgery rates in Massachusetts. Am. J. Public Health 71, 370–375 (1981)CrossRefGoogle Scholar
  9. 9.
    Hurley, J., Labelle, R., Rice, T.: The relationship between physician fees and the utilization of medical services in Ontario. In Scheffler, R., Rossiter, L. (eds.) Advances in Health Economics and Health Services. JAI Press, Greenwich (1990)Google Scholar
  10. 10.
    Levy, J.M., Borowitz, M.J., Jencks, S.F., Kay, T.L., Williams, D.K.: Impact of the Medicare fee schedule on payments to physicians. J. Am. Med. Assoc. 264, 717–722 (1990)CrossRefGoogle Scholar
  11. 11.
    Escarce, J.J.: Medicare patients’ use of overprices procedures before and after then Omnibus Budget Reconciliation Act of 1987. Am. J. Public Health 83, 349–355 (1993)Google Scholar
  12. 12.
    Escarce, J.J.: Effects of lower surgical fees on the use of physician services under Medicare. J. Am. Med. Assoc. 269, 2513–2518 (1993)CrossRefGoogle Scholar
  13. 13.
    Mitchell, J.M., Hadley, J., Gaskin, D.J.: Physicians’ responses to Medicare Fee Schedule reductions. Med. Care 38, 1029–1039 (2000)CrossRefGoogle Scholar
  14. 14.
    Hadley, J., Mandelblatt, J.S., Mitchell, J.M., Weeks, J.C., Guadagnoli, E., Hwang, Y.T.: OPTIONS Research Team Medicare breast surgery fees and treatment received by older women with localized breast cancer. Health Serv. Res. 38, 553–73 (2003)CrossRefGoogle Scholar
  15. 15.
    Gruber, J., Kim, J., Mayzlin, D.: Physician fees and procedure intensity: the case of caesarean delivery. J. Health Econ. 18, 473–490 (1999)CrossRefGoogle Scholar
  16. 16.
    Keeler, E.B., Fok, T.: Equalizing physician fees had little effect on caesarean rates. Med. Care Res. Rev. 53, 465–471 (1996)CrossRefGoogle Scholar
  17. 17.
    Hurley, J., Labelle, R.: Relative fees and the utilization of physicians’ services in Canada. Health Econ. 4, 419–438 (1995)Google Scholar
  18. 18.
    Nguyen, N.: Physician volume response to price controls. Health Policy 35, 189–204 (1996)CrossRefGoogle Scholar
  19. 19.
    Nguyen, N., Derrick, F.: Physician behavioural response to a Medicare price reduction. Health Serv. Res. 32, 283–298 (1997)Google Scholar
  20. 20.
    Zuckerman, S., Norton, S., Verrilli, D.: Price controls and Medicare spending: assessing the volume offset assumption. Med. Care Res. Rev. 55, 457–478 (1998)CrossRefGoogle Scholar
  21. 21.
    Carlsen, F., Grytten, J., Skau, I.: Financial incentives and the supply of laboratory tests. Eur. J. Health Econ. 4, 279–285 (2003)CrossRefGoogle Scholar
  22. 22.
    Statistics Norway: Årsverk av legar med ulike avtaleformer i kommunehelsetenesta. Sentralitet. 1994–2004. (31.5.2006) (2006)
  23. 23.
    Statistics Norway: Inntekts- og kostnadsundersøkelse for Privatpraktiserende leger 1995. Leger med driftstilskuddsavtale har best driftsresultat. Ukens Statistikk 37, 3–4 (1996)Google Scholar
  24. 24.
    Skau, I.: Folketrygdens refusjoner til allmennlegehjelp. En beskrivelse avkontaktmønster, takstbruk og trygderefusjoner. Research Report 1/1998. BI Norwegian School of Management: Sandvika (1998)Google Scholar
  25. 25.
    Økonomi & Helse: 1, 1–2 (1997)Google Scholar
  26. 26.
    Phelps, C.E., Mooney, C.: Variations in medical practice use: causes and consequences. In: Arnould, R.J., Rich, R.F., White W. (eds.) Competitive Approach to Health Care Reform, pp. 139–178. The Urban Institute Press, Washington DC (1993)Google Scholar
  27. 27.
    Grytten, J., Sørensen, R.: Practice variation and physician-specific effects. J. Health Econ. 22, 403–418 (2003)CrossRefGoogle Scholar
  28. 28.
    Carlsen, F., Grytten, J.: More physicians: improved availability or induced demand?. Health Econ. 7, 495–508 (1998)CrossRefGoogle Scholar
  29. 29.
    Grytten, J., Carlsen, F., Sørensen, R.: Supplier inducement in a public health care system. J. Health Econ. 14, 207–229 (1995)CrossRefGoogle Scholar
  30. 30.
    Grytten, J., Carlsen, F., Skau, I.: The income effect and supplier induced demand. Evidence from primary physician services in Norway. Appl. Econ. 3, 1455–1467 (2001)CrossRefGoogle Scholar
  31. 31.
    Sørensen, R., Grytten, J.: Competition and supplier induced demand in a health care system with fixed fees. Health Econ. 8, 497–508 (1999)CrossRefGoogle Scholar
  32. 32.
    Prendergast, C.: The provision of incentives in firms. J. Econ. Lit. 37, 7–63 (1999)Google Scholar
  33. 33.
    Sørensen, R., Grytten, J.: Service production and contract choice in primary physician services. Health Policy 66, 73–93 (2003)CrossRefGoogle Scholar

Copyright information

© Springer-Verlag 2007

Authors and Affiliations

  1. 1.Dental FacultyUniversity of OsloOsloNorway
  2. 2.Department of EconomicsNTNUTrondheimNorway
  3. 3.Health Economics BergenBergenNorway

Personalised recommendations