Pricing Decisions by Australian General Practitioners

Abstract

In the Australian market for primary healthcare, some General Practitioners (GPs) bulk bill patients while others charge them a direct fee. The prevalence of these two fee structures means that patients are paying different prices for the same service. From a policy perspective, universal bulk billing is preferred since this leads to more equitable access to free primary healthcare. The empirical observation that bulk billing and fee charging GPs can exist in a single location has not been explained in the literature. This thesis seeks to explain the observation by differentiating GPs into those who provide long consultations and those who provide short consultations. Given the nature of policy in the market, these two types of GPs have different incentives when deciding whether to bulk bill or charge a fee. The hypothesis put forward in this thesis is that GPs who have long consultations will prefer to charge a fee while GPs who have short consultations will prefer to bulk bill.