Physician Dual Practice: Access Enhancement or Demand Inducement?

In many developing countries, the majority of physicians employed in government clinics also have a private practice. We develop a simple model to show that allowing dual practice helps low-income governments retain skilled physicians to assure patient access. If dual-practice providers di¤erentially refer higherincome patients to private practice, public funding becomes more e¤ectively targeted on the poor. Yet dual practice physicians may also skimp on e¤ort, pilfer supplies, and induce demand. Patterns of care-seeking in Indonesia, especially disproportionate use of private providers by the urban poor, are consistent with exacerbated incentive for physician self-referral to private practice in urban areas. JEL Classi...cation: I1, J3, O1