Japan's clinic physicians and their behavior

Abstract

The paper examines the behavior of the Japanese general practitioner or clinic physician. Clinic physicians in Japan are entrepreneurs who own and operate their own clinics with either no beds or less than 20 beds. They have been the prime providers of Japan's health care, and they are represented by the politically powerful Japan Medical Association. General practitioners are reimbursed basically on the basis of fee-for-service with fees determined by the authority. Japan has universal health insurance. The paper modeled the general practitioner as a maximizer of his own utility and explored its theoretical and empirical implications. The maximization of his own utility which is a function of his income and leisure time should reflect the fact that the physician's conscientious behavior is relied upon for the effective delivery of medical care in Japan. Our empirical results found that revenues and net profits of clinics are critically related to the quantity of drugs used, the age of physicians and the size of clinics. This finding gives some support to the oft-heard allegation in Japan that physicians maximize their income by prescribing more drugs and examinations.