Variation in Specialist Physician Consultation Fees

Chenhao Liang (), Jongsay Yong () and Yuting Zhang ()
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Chenhao Liang: Melbourne Institute of Applied Economic an Social Research, The University of Melbourne, Australia, https://findanexpert.unimelb.edu.au/profile/1006717-ryan-liang
Jongsay Yong: Melbourne Institute of Applied Economic an Social Research, The University of Melbourne, Australia, https://findanexpert.unimelb.edu.au/profile/9200-jongsay-yong
Yuting Zhang: Melbourne Institute of Applied Economic an Social Research, The University of Melbourne, Australia, https://findanexpert.unimelb.edu.au/profile/782676-yuting-zhang

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: Specialist physician fees in Australia are set at the discretion of the treating physician, guided only by a non-binding government schedule fee. Using administrative data on 5.8 million initial specialist consultations in 2023/24, we risk-adjust fees for patient characteristics and decompose the residual variance into physician, specialty, and regional components using a four-level random effects model. Accounting for patient risk factors reduce the fee variance by at most 5.3%. Physician-level variation accounts for 44.6%, specialty for 22.1%, and region for 3.8%; the ranking is broadly stable across six major specialties estimated separately. These results indicate that the fee dispersion of initial consultations, which is a schedule-priced, largely homogeneous service, is driven predominantly by physician-specific pricing discretion rather than by patient need, specialty norms, or geographic market conditions. We discuss implications for fee regulation and price transparency policy.

Keywords: physician pricing; fee variation; variance decomposition; out-of-pocket costs; price transparency; Medicare (search for similar items in EconPapers)
JEL-codes: D40 I11 I18 (search for similar items in EconPapers)
Pages: 31pp
Date: 2026-10
New Economics Papers: this item is included in nep-hea and nep-reg
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