Physician Competition And Low-Value Health Care

Abstract

Although countries have implemented pro-competitive reforms in health care to reduce costs and improve quality, there is limited evidence on the effect of competition on quality of care provided by physicians. We study the effect of competition on the provision of low-value—ineffective or harmful—health care by general practitioners (GPs). We use rich patient-level data on GP consultations in Australia and measure competition as distance to other GPs. Our study found that GPs facing more competition provide lower quality of care by ordering more imaging for low back pain and uncomplicated acute bronchitis. We find similar but smaller and insignificant effects of competition on prescribing antibiotics for coughs and colds. Competition can have mixed effects across different conditions because of differences in GPs’ beliefs and patient expectations about the effectiveness of care, as well as differences in demand, costs, and profit.