Physician density in a two-tiered health care system

We investigate the density of non-contract (private) physicians in a two-tiered health care system, i.e., one with co-existing public and private health care providers. In particular, we analyze how the densities of private and public suppliers of outpatient health care (general practitioners and specialists) are related to each other. Using a panel of 121 Austrian districts between 2002 and 2008, we apply a Hausman–Taylor estimator, which allows to treat each of these densities as endogenous. We find that the density of non-contract specialists is positively associated with the density of non-contract general practitioners, but not significantly related to the density of contract general practitioners. We also observe a negative relationship between the densities of non-contract and contract general practitioners and the ones of non-contract and contract specialists, indicating competitive forces between the private and the public sector of the outpatient health care provision in Austria. Our results contribute to the ongoing debate on the role of non-contract physicians for health care provision in Austria.