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Sot. SL.I. .Mrd. Vol. 22. No. 3. pp. 321-328.

Pnnted ,n Grear Bntun. -\II nghts reserved

1986
Copyright

0X7-9536
56 S3 00 + 0.00
( 1986 Pergamon Press Ltd

THE DEMAND FOR ADULT OUTPATIENT SERVICES


IN THE BICOL REGION OF THE PHILIPPINES
JOHS

S.

AKIS.

CHARLES

and
Carolina

Population

Center.

University

C.

GRiFFIN. DAVID K. GUILKEY

BARRY M.

POPKIS

of Sorth Carolina,
NC 27514, U.S.A.

University

Square

300A. Chapel

Hill.

.Gstract-The
absence of demand analysis for primary health care services has hampered efforts to finance
these services and to make them permanent parts of Third World medical systems. This paper introduces
a demand model for adult outpatient
services, describes the types of data required for estimating it, and
presents the results of a preliminary
estimation
using data from a poor rural region of the Philippines.
The results indicate that prices and distance are not nearly as important
as determinants
of demand in
this sample as has usually been assumed by planners. There appears to be considerable
room for full or
partial financing of outpatient
services from user fees.

I. ISTRODUCTION

The principal goal of the primary health care (PHC)


movement has been to improve the health of the rural
poor. Thus the problem of resource allocation has
included a biological aspect (the improvement of
health status), a social component (the improved
distribution of health resources) and an underlying
development objective (investment in human capital).
The actual allocation of resources has usually been
based on inventories of health needs and on a desire
to improve the per capita supply of modem government medical practitioners. This approach has led to
an overriding concern with the geographic distribution of medical personnel and facilities.
It has generally been assumed that governmental
personnel and facilities should be provided free to
clients, or for only a nominal charge. This could
imply at least four assumptions: (1) that the most
important barrier to utilization is the cash price of the
service, (2) that the clients attracted by a cash cost of
zero are the ones the government desires to reach. (3)
that there is little or no current private spending on
medical services that could be redirected towards
governmental services and (4) that services would be
underutilized if there were a charge. In addition
medical care may be extended gratis because it is
taken as a right or is deemed a desirable use of
government moneys.
Recently, governments and donor agencies have
become more aware of the tremendous financial
burden of trying to supply areas with new personnel
and facilities. As international agencies have begun to
withdraw their seed money from PHC programs,
health ministries have had difficulty meeting recurrent program costs, managing dispersed service delivery networks, and maintaining the commitment of
voluntary paraprofessionals.
In this context, it is surprising that so little attention has been paid to community-based analyses of
the demand for PHC services. If health care were
purely a clinical phenomenon,
then it would be
adequate to simply take an epidemiological inventory
321

of health needs and supply the appropriate preventive


and curative health services. However, fostering the
use of new health services and changing specific
practices, such as water collection methods. excreta
disposal and traditional methods of childbirth, require that attention be paid to individual behavior
patterns. Moreover. because health services are supplied in a world of limited resources, the assumption
that people are entitled to free health care often must
give way to practical financial considerations.
These neglected aspects of PHC planningcommunityand household-level
behavior and
financial considerations-are
exactlv the focus of
microeconomic demand analysis. If it were possible
to answer at least some of the following questions
before PHC programs were put in place, planners
would find the job of sustaining the programs much
easier.
(1) In a descriptive sense, what are existing medical
service consumption patterns? What proportion of
people use existing traditional, private modem, and
public medical practitioners?
(2) Why do people follow the patterns described in
(1) above? In other words, what are the determinants
of demand? How important are acces<ibility, price
and income in household medical care choices?
(3) How much is currently spent on health care?
What are people willing to pay for new medical
services? Is it possible for new PHC services to
divert a portion of existing expenditures into PHC
coffers, or must new PHC services be offered free-ofcharge?
(4) Do free government services reach the poorest
groups? Put another way, do the poorest groups fail
to use medical services because of costs or for other
reasons? Is it possible that free services subsidize
higher income groups if these groups are the only
ones who use modern care?
These are the questions that prompt our interest in
the demand for PHC services. This paper gives some
early results from work that is currently underway

using household and community data from a poor


region of the Phillipines*.
The absence of community-based analyses of the
demand for primary care services has hampered
efforts to find new ways to finance these services.
Demand analysis. in g.eneral, describes the relationship between quantities of the good or service
desired to be purchased and the price charged for that
service. In order to isolate this price-quantity
relationship. it is necessary to control (statistically with
control variables) for all nonprice factors, such as
tastes. needs. income level. and demographic factors,
that also affect the quantity demanded. It is also
imperative that supply characteristics be accounted
for so that the relationship that is isolated is actually
a demand-induced phenomenon and not due simply
to availability of the service. Because demand
analysis requires the examination of all these nonprice factors. it can be useful as a guide to policy
when the policy-maker requires information on the
whole array of possible points of intervention. A
full-scale demand analvsis. therefore, describes the
relationship between desired purchases of consumers
and all factors affecting these demands. In this article
the demand for public modem, private modern and
private traditional health services for adult outpatients will be examined in the manner described
above.
This paper is organized in the following manner.
Part II briefly describes a medical service demand
model. Part III discusses both the data required to
estimate such a model and the actual surveys used for
this paper. In Part IV, a model of the demand for
adult outpatient care is estimated using data from the
Philippines.
II. AN ECONOMIC MODEL
FOR PROJECT PLANNING
AND EVALUATION

Anthropologists,
sociologists and geographers
have had a considerable amount of success finding
negative correlations between medical service use and
so-called barriers to utilization. These barriers include such items as physical distance from households to facilities, cultural distance between patients
and providers, the unavailability of drugs, the length
of time spent waiting at facilities and the unavailability of transportation.
Building on this work, we have developed a demand model under the assumption that a sick individual faces the choice of self-treatment as one alternative, and professional treatment from a traditional
practitioner, a government clinic or a private physician as another. The choice of practitioner depends
on household constraints, such as income, the number of residents, the authority structure of the household and its assets. The choice is also determined
partially by the barriers to use mentioned earlier,
*The authors wish to emphasize the preliminary
nature of
the analysis done in this paper. We have since completed
a much more complete improved analysis, the report of
which has been published as a book, Tk Demand for
Primary Healrh Care in rhe Third World [I], in the fall
of 1984.

which have important economic significance. Distance is translated into the opportunity cost, stated in
terms of both time and money, ot getting to a
practitioner. Similarly, there are time and pecuniary
costs associated with waiting to be seen. purchasing
drugs and making return visits to continue treatment.
Variables must also be included to account for the
effects of education, sex. rural/urban residence and
practitioner supply on medical service use. Figure 1
presents these factors. which are reveiwed in more
detail elsewhere [I].
111.DATA
Data requirements for such a model are extensive.
Community data are required to supply the prices,
travel time and waiting time associated with each type
of facility or practitioner. To this end, it is necessary
to inventory the practitioners used by residents from
each community and to visit each practitioner to
collect facility-level data. Household data must supply information on assets, household organization,
household location, income and time constraints.
Individual data on education, illnesses, pregnancies
and medical practitioner choices must be collected for
all people living in the survey households.
Estimating the demand model described in the
previous section is accomplished in this paper using
two sets of data: a 1978 household survey conducted
in one of the poorest regions of the Philippines, the
Bicol Multipurpose Survey (BMS78) [2], and a 1982
medical facility survey (BMSSSI) collected during
visits to 518 traditional and modern facilities (or lone
practitioners) serving the 100 communities included
in the 1978 survey [3].
From the 1978 survey, household information was
collected on the condition of the dwelling, ownership,
assets and a wide variety of other economic and
demographic variables. Individual information on
about 17,000 household members includes extensive
work, income and home time-allocation data; health,
child-rearing and pregnancy-related information: and
a massive compilation of demographic variables.
Respondents were asked whether anyone in the
household had been sick in the month previous to the
survey and, if so, what was done for the illness,
whether it was serious, how much was spent, how
long physician visits took, and so on. One problem
with this survey was that only cash- and timeexpenditure data reported by people who used medical services were available to use as proxies for
medical visit prices.
In the medical service demand literature, the use of
expenditures instead of prices is a common approach.
but it is to be avoided for several reasons. First,
expenditures are simply the number of visits multiplied by the average price of each visit. What a
demand model explains, however, is the number of
visits; so it is a serious mismeasurement of the price
variable to include elements of the dependent variable
in it. Second, expenditures are likely to include more
than just the price of the visit; drugs are the most
obvious addition. Third, an individual will not report
expenditures for services not used. For example, if
someone chooses a private physician, he or she will
have missing values for expenditures at traditional

Demand

for adult

outpatient

services

in the Philippines

323

PRICE

cost

rransportar1on

rime

waltlng

money cost
co~nwrance
OTHER

cash price

/soc~aI

securlry

PRICES

subst!rJtes

INCOME
level
sources
fYpes
assefs

TIME
nature

wealth

ALLOCATION
of work

felt

FOR

HEALTH

CARE

modern

public

modern

prlvare

trodiflonal

accupaflon

HEALTrl
physlologtcal

DEMAND

PRIMARY

prtvote

NEEDS

/real

household

stze

KNDWLEDGE
culrural

INFORMATION

Issues

education

SEASONALITY
healfh
effecrs
cost

effecrs

Fig. I. Determinants of demand for health services in the Third World.

healers and government clinics. Analysts commonly


replace these missing values with average expenditures based on the experiences of other users,
but such numbers do not necessarily give a true
measure of the whole array of prices facing each
household.
For these reasons, the 1982 survey of health facilities and practitioners was undertaken. Data were
gathered on payment prices, hours of operation, and
available medical personnel. Additional questions
were asked on the villages served as well as distance,
cost of travel and patients usual mode of transportation to each facility or practitioner. Data were
also gathered on the types of services offered. For
adult outpatient care, child outpatient care, clinic
deliveries, home deliveries, prenatal care, well-baby
care, child immunizations
and adult vaccinations,
practitioners were asked the usual price for one visit,
the usual practitioner and the usual waiting time.
They were also asked about services extended for five
gastroenteritis,
illnesses:
specific
tuberculosis,
influenza, pneumonia and bronchitis.
Iv.

E>lPIRICAL

STUDY

In conventional demand analysis, consumers are


assumed to allocate their budgets simultaneously
over all goods and services they are interested in

purchasing. Because all purchases are related to one


an0ther-e.g.
if a large medical bill is expected, it
may not be a good time to buy a full-length ermine
coat-the
prices and quantities of all goods ideally
must enter a system of demand equations. It is a
misspecification of the model to break off one set of
services, such as medical care, and estimate the
demand for those services in isolation from all other
consumption behavior.
To get around this problem, the analyst makes use
of the concept of separability, which allows one set of
goods, such as medical services, to be analyzed
separately. To do this requires one of two assumptions: either that the prices of the goods involved
maintain a stable relationship with each other (e.g.
that prices at private clinics, public clinics, and
traditional practitioners stay in the same positions
relative to each other) or that consumers allocate
their budgets in a well-defined fashion. The behavior
implied for consumers is that they make an initial
allocation of their budgets to different categories of
goods, such as to food. shelter, clothing. transportation and medical care, and thereafter maximize
utility within each of these categories without further
reference to the others. Only at the time of the initial
budget allocations are the branches considered together [4].
These issues are explained because a potential

JOHN S. AKIS

37-l

source of disagreement
with the approach used here
is the matching of 1978 household data (BMS78) and
1981 barangay-level
prices from the facility survey
(BMSS8l). It should be clear at the outset. however.
that in order to isolate demand equations for medical
services from other goods categories. the assumption
is already made that the relative prices of the goods
are stable. which is the same assumption necessary to
validate the matching of 1978 and 1981 surveys. We
are not assuming that in 1978 the sample faced the
same prices as were collected in 1981, only that they
faced the same price structure. If private clinics were
twice as expensive as traditional healers in I98 1, they
are assumed to have been twice as expensive in 1978.
This is not, in fact, an outlandish
assumption
over
such a short time period for services that are close
substitutes for each other.
The adult outpatient model is a modification of the
following general demand system:

where
Q,, = whether medical service i is used by the jth
individual. where i = (public. private. traditional. or no care) and j = (all sick or
pregnant individuals, the sample depending
on the model)
PU, = public clinic or hospital
serving the jth
individual
PR, = private clinic or hospital serving the jth
individual
TR, = traditional healer or midwife serving thejth
individual
P = vector of cash prices paid for each service
(including visit cost, drug costs and transport costs)
T = vector of time costs associated with each
facility and service (waiting time, transport
time)
Y, = household assets for the jth individual
Z, = a vector of social, demographic,
and biological control variables for thejth individual.

a,=f,jvPL,. p,,, pm,,


Tw,, TIT,, TTR,,y,>Z,, (1)
Table

I. List of variables

Dependent

The choice

of practitioner

with sample statistics. used in estimating


the demand
Philioaines.
1978 (samale size = 399)

variable

for adult

Frequency

Visit:
Traditional
Public
Private

60
73
124
142

NOM

Independent

er al.

variables

*8 pesos were equal

to USSl.00

at the time of the survey.

0.49 pesos*
14.49 pesos
3. IO pesos
13.72 km
9.41 km
0.31 km
63.24
100.32
I I.68
26.39
0.1 I

on the relative

outpatient
?/,
15
IS
31
36

Mean

Opporiunit~ cm0
Cash prices for one adult outpatient visit
Public
Private
Traditional
Distance to closest facility of practitioner
Public
Private
Traditional
Waiting time
Public
Private
Traditional
Amount spent on drugs
Whether covered by insurance (0 = no; I = yes)
Household msers and income
Number of rooms in house
Annual household income from all sources
Number of individuals
in household
Sanitary raring of water source
Sanitary quality of toilet facilities
Demographic
Male (0 = female; I = male)
Urban (0 = rural; I = urban)
Model
Type of household
0 = extended family
I = nuclear with other residents
3 = nuclear or single
Education
Highest grade completed
Perceprion
Perceived quality of life-family
health and physical condition:
I = dissatisfied
7 = very satisfied
Perceived quality of life--availability
of health services:
I = dissatisfied
7 = very satisfied

depends

SD

2.00
4.05

1.66
13.37
10.45
0.53

min
min
min
pesos

84.32
101.67
36.3 I
70.81
0.3 I

I .43
1955.83 pesos
6.79
1.56
1.82

0.94
10426.23
2.78
1.04
1.33

0.52
0.23

0.50
0.42

2.44

I .08

6.57

3.80

I .40

3.09

I.21

3.4

wits,

Demand for adult outpatient services in the Philippines


cash and time costs associated
with each facility,
household
income. and a set of control variables.
Table 1 contains a list of variables used in the
analysis. along with their definitions
and simple
descriptive statistics. The dependent variable is constructed in the following manner using the BMS78
data:
Traditional

Visit = visit to herbolario


(healer)
hilot (traditional
midwife)

or

Public Visit = visit to rural health unit, city


health office. puericulture center, or public hospital
Private

Visit = visit to private


private hospital

No Visit = no professional
sought.

clinic or to a
consultation

The variables above include housecalls when the type


of practitioner
can be identified. Sixty-three percent
of the traditional visits fall in this category. The cash
cost variables come from the closest single private
facility, public facility. and traditional
practitioner
serving each barangay.
Sick individuals reported the total amount of time
required for each visit; this is transformed
into the
time-price for each practitioner. The distance variable
is calculated as an average for each type of facility by
barangay, using the supplemental
facility data gathered in 1981. It is clear from the means for the
distances reported in Table 1 that all areas are well
supplied with traditional
practitioners,
but that a
considerable
cost in terms of time, distance and
transportation
expenses may be incurred in order to
use either the public or private modern practitioners.
Economic theory requires that the dependent variable in the demand system defined above be continuous; i.e. for each individual the exact quantity of
each service consumed should be known. However,
only the type of practitioner
used is known; so the
dependent variable is limited to values of 0 or 1 for
each
alternative.
Consequently,
ordinary
least
squares is an inappropriate
technique
to use for
estimating
this model, and the multinominal
logit
procedure is used. In the logit approach, the system
of demand equations takes this form:
P (Public
log

P (Traditional

log

P (Traditional

P (Private

log P

Visit)
Visit)

= JYPublic

Visit)
Visit)

= WLXe

P (No Visit)
(Traditional

Visit)

= UN0 ,W.

The probability of a traditional visit is then equal, by


definition, to 1 minus the sum of the three probabilities listed above, or
P (Traditional

Visit) = 1 - [P(Public) + P(Private)


+ P(No Visit)].

Table 2 contains the expected coefficient


the economic
variables appearing
in the
model. The coefficient estimates are reported
3. In reporting the results, the economic

signs for
demand
in Table
variables

315

described above are grouped by prices, distances and


time.
Microeconomic
theory suggests that the probability of a visit to a particular practitioner
will be
negatively related to the costs associated with that
practitioner and positively related to the costs associated with the substitutes. Table 3 indicates, however,
that in no case is the cash price statistically significant
at the 10% level (an asymptotic t-statistic of approx.
1.6). The estimated coefficients are extremely small,
and the signs are occasionally
opposite of what is
expected.
These results showing little significant effect of cash
prices on the choice are not without meaning, however. First. a number of studies have found that
individuals are insensitive to the money cost of health
care, even in low-income countries [5]. Second, the
variation in prices for the three types of practitioners
is quite large and in exactly the direction one would
expect: the average cost for public visits is 0.5 pesos,
traditional visits cost an average of 3.10 pesos, and
private visits cost an average of 14.49 pesos. Private
clinics and hospitals thus charge over 28 times as
much, on the average, as government
clinics and
public hospitals.
The insensitivity
to price that is
apparent from the model suggests that public services
may have a fair degree of latitude for manipulating
their charges to help offset operating costs. Third,
since this model does not control for the severity of
illnesses or quality, it is possible that the apparent
insensitivity to price may be at least partially caused
by the wtlhngness of individuals to pay more to get
higher quality care. Alternatively,
private practitioners and traditional healers may informally cut
their prices below those reported by using sliding fee
scales.
In financing public health care services, this possibility may be an important
consideration.
In our
survey of 518 health facilities in the 100 sample Bicol
barangays, 288 of the 397 (or 73%) facilities which
charged fees indicated that fees varied according to
the income of patients. In addition, 329 (or 63%) of
the facilities accepted payment in the form of goods
or services instead of cash. These different pieces of
evidence suggest that the insensitivity to costs may be
rational in the face of a recognized need for health
care, especially if informal
mechanisms
exist for
ameliorating
the apparently
high formal costs of
private care.
Distance should also act as a price variable. The
farther a particular facility is from a barangay, the
less frequently it should be used by residents of that
barangay, other things equal. Conversely, the farther
away are alternative facilities, the more likely it is that
the closest facility will be used. The distance
coefficients reported in Table 3 tend to have the
predicted
signs, and although
the asymptotic
tstatistics are generally higher than they are for cash
prices, only three of the coefficients, two of which are
for the distance from traditional
practitioners,
are
statistically significant (10% level). This is an interesting result, because the mean distance from traditional practitioners
is 0.31 km compared to 9.41 km
for private and 13.72 km for public facilities. Small
increases in the distance to traditional
practitioners
appear to induce a substantial increase in the proba-

JOHN S. AKIN et al.

326
Table

2.

Expected

signs

far

economic

variables

\s

distance.

waiting

logrt

1s

traditional

Public

L
?

Private

coberqe

No

No

VIJlt

vs

traditional

>

estrmates

PrrKite

pribate

public

VlSli
vs

\s

pubhc

time

Traditional

Insurance

outpatient

visit

No

rs

traditional
Pnces.

in adult

Pn\ste

Pubix

+
_

Income--assets
Sumber

of

Income--all

T.ible

rooms

in house

3.

Multiple

logit

results:

demand

for

adult

outpatient

so~~rces

services,

Philippines.

1978.

Coefficient

estrmates

(asymptotic

r-value

in

parentheses)
Probability

of

visit

Private

Public

vs 8

No

traditional

traditional

No

Private

VS

-.S

visitt

visit

\&it

traditional

No

visit

VS

private

public

public

Prices
Traditional

0.1513

0.0897

(1.136)
Public

(0.763)

0.0499

Prirate

(0.625)

0.047s

0.009
(0.090)

-0.036

(-0.137)

(-0.166)
-0.0782

- 0.069

(-0.860)

(-0.617)

-0.055

(-0.754)

-0.0166

-0.078
(-0.663)

-0.019

-0.0067

(O.SS5)

-0.062
(-0.524)

(-0.199)

0.0592

(0.4397)

0.073
(0.653)

-0.0295

-0.084

(-1.18)

(-

(-0.752)

1.75)

DiciUtlCtT

Traditional
Public
Pri\

1.212

0.881

ate

(I ,696)
0.00 I2

(2.496)

(0.0669)

(0.582)

0.0094

-0.0234
(-

0.607

(1.08)

0.0137

(-1.39)

-0.605

(-0.790)

0.0082

(0.887)

-0.0253

1.061)

-0.275

0.330

(1.27)

-0.0126

(0.587)

-0.01

-0.002

(-0.973)

( - 0.098)

(-2.09)
0.0044

(0.879)

(0.355)

0.0061

0.008

(0.247)

(0.494)

Waiting rime
Traditional

-0.0195*

-0.0107*
(-

Public

2.10)

(-

-0.008
-0.0032

Drug

expenditure

(0.032)

0.0181*

0.01879

Insurance

I.22

1.378

(1.497)

(I ,827)

Income

a.sW,S

Number

of

rooms

in

house

-O.OS-ll

Income--all

sources

0.242

Household

size-people

o.OvOao3
(0.208)

(-0.777)

(-0.3%)
Quality

of

water

0.4-l5*

0.4232

(1.95)
Quality

of

toilet

-0.023

(-0.0136)

(-

-0.027

(0.345)

(-0.445)
(-

0.943

1.39)

(-0.250)
0.0778

0.0506

(1.378)

(0.785)

-3.91

-0.412

1.097)

(-

1.94)
- 0.000007

(-1.14)

(-2.07)

(-0.197)

(0.649)

-0.366
(-

-0.CGO3

(-0.021)

(0.172)

-0.219

-0.0402

(-1.04)

0.233

-0.977
(-1.97)

(-0.0184)

-0.00@02

0.0321

(2.07)

-0.820

0.326*

(-1.02)

-0.0545

-0.0619*
(-5.33)

(-1.37)

(1.66)

- 0.00003

(-0.899)

-0.0615*

0. I57

-0.124

0.00014
(0.081)

(-5.28)

(0.280)

(-0.527)

-0.00002

-0.0272

0.00035

0.40 I

(1.04)

(-0.325)

0.00339
(1.47)

(0.192)

(0.517)

0.0038
(1.55)

3.24)

(1.52)

(-3.44)

coverage

-0.0067
(-

-0.0032

-0.0432.

(2.74)

(2.672)

I*

(-4.14)

O.OOQ? I
(0.1033)

-0.00007

(1.57)

(0.321)

-0.01

(0.539)

0.0104

0.0016

(-1.28)

-0.0012

(-0.923)

(-1.25)

-0.0088

(-2.154)

-0.0025

(3.22)
Private

-0.0091*

2.923)

(-

2.35)

O.lli

1.307)

0.314
(2.44)

(0.803)

Demographic

(I = male,

Male

0 = female)

0.463

-0.0149

tirban

(I

Scale

= urban,

of

0 = rural)

wad.-nuclear

HH

0.22

(1.29)

(-0.376)
0.310

0.406

0.370

(0.491)

(0.719)

(0.676)

-0.336

-0.0812

Education

0.0955

-0.0354

0.0601

0.0659

(-0.0873)

0.0375

-0.0285
(-0.205)

(0.239)

0.023

0.0437

0.607

(0.455)

(1.39)

(-0.833)

(0.120)

(0.427)

0.076

(0.558)

- 0.242

0.371
(1.10)

(0.195)

1.94)

(-

0.0325

0.0092
(0.149)

0.0618
(1.80)

-0.363

(-1.720)

(-0.329)

(0.657)

(0.942)

(1.33)

Perceptions
Satisfaction

with

family

health

-0.00421

-0.0625
(-0.413)

Satisfaction

with

health

services

-0.074

Consmnt
lr+alues
+The

numbers
first

relative

at

reported

entry

in the

or

are
first

traditional

visit

abobe
the

column

to a traditional

to a traditional
the

(-

-0.451

is signiricant

visit
goes

practitioner.

0.10

level.

logarithms

of

is positive
goes

up.

down-people

the

In contrast.
are

more

(-

which

that

indicates

1s traditional
likely

to

that

relative
as the

waiting
use

tradrtronal

time

goes
rather

probabihty
price

up (-0.0107*),
than

pubhc

0.0172

(0.800)

(0.125)

3.00

I.41

I .59

to the

(-0.426)

-0.122

(-0.937)

traditional

-0.0486

(-0.213)

-0.140

1.269)
2.55

occurs

-0.0281

(0.162)

-0.1964

1.38)
I.144

probability

(O.l513).

(-0.686)

-0.2136

( - 0.429)

0.0204

-0.0907

(-0.310)

that

increases.
the
facilities

occurx

the

probabdit)
if they

For

example.

probability

the

of

a public

of a public

relative

must

wait

longer

for

Demand for adult outpatient services in the Philippines


bility of using modem facilities. There also appears to
be a certain amount of substitutability between traditional and private modern practitioners. However,
because some of the coefficients to support this
hypothesis are statistically insignificant, this hypothesis requires further testing.
The time-price coefficients tell a much more confusing story. While six of these coefficients are statistically significant, the results are generally less strong
than expected. All other things constant, the longer
it takes for a public visit, the less likely that patient
is to choose a public facility over a traditional one.
This, however, is not the case for public vs private
modern. As time to use public facilities increases, the
use of public relative to private modern also increases. There is the obvious possibility that waiting
time at public facilities may be positively correlated
with higher quality medical care. These results are
interesting in light of the usual impression, culled
from simple correlations, that waiting time is an
urgent problem at public facilities and makes them
significantly less desirable than the alternatives [I].
In every case the traditional time variable is
significantly, negatively related to the probability of
making alternative visits. In other words, the longer
a traditional visit takes, the more likely that it will be
preferred to the alternatives. This result may be due
to the fact that a few of the types of techniques that
require longer visits at traditional practitioners, such
as massages and certain rites or incantations, are the
ones most favored by patients. In such a case the
traditional practitioners who take more time would
be more likely to be chosen. In fact, these traditional
visits may be pleasant experiences which add to the
attractiveness of traditional medicine and thus cause
the time variable, as we have used it, to be misleading.
An alternative explanation is that the time of day
when these long visits take place may be off-hours
when the opportunity cost of the visit is actually quite
low even though the commitment in minutes may be
high.
Higher pharmaceutical prices have counterintuitive
effects: they increase the probability of using both
modern alternatives relative to traditional practitioners.
As expected, having insurance leads to a preference
for private practitioners over traditional ones. However, insurance does not appear to have a major
influence in the choice of private vs public modern
practitioners as the coefficient is not statistically
significant.
The income variable is included to show the effects
on medical purchases of an enhanced capacity to
consume all goods and services while controlling as
best we could for the quality and quantity of household assets. The general result for income is that as
income rises, both types of modern services tend to
be substituted for the other two alternatives (no visit
and traditional), and private doctors tend to be substituted for public clinics within the modern sector.
Demographic

variables

The demographic

variables indicate a statistically

significant increase in the probability of a private visit


relative to a public visit if the sick person is male. This
may be indicative of a diversion of resources towards

327

males to improve the quality of their care: alternatively. if males in the sample suffer from more serious
problems, it may be simply a need-oriented rather
than a behavioral phenomenon.
In only one case does the education variable even
approach statistical significance. This is in the cell for
the probability of no visit relative to a traditional
visit. The sign is positive, a finding consistent with
many simple correlations done by other authors,
which show that educated people are more willing
and confident than others to engage in home treatment.
The perception variables are included to control
for perceptions and acculturation
with no expectations about the signs.

V. CONCLUSION

This paper reviews some of the issues involved in


an economic analysis of demand, and provides a
preliminary analysis of data collected in the Bicol
region of the Philippines. This case study, conducted
for adult outpatient visits, provides insight into the
ways such analysis can clarify various planning issues. The method calls for price, time and other
factors to be considered together, and leads to a
number of important
findings relevant to the
financing issue.
First, before conducting the survey of facilities in
the Bicol region, we assumed that there would be a
dearth of private doctors and that existing facilities
would be fairly inaccessible. The survey uncovered a
large and vigorous network of public, private and
traditional practitioners. Second, almost half the
sample used private modem or traditional fee-forservice medicine even though the public system of
free clinics and hospitals is at least as accessible as the
private modern clinic system. Third, prices and distance do not appear to be important determinants of
demand; so there appears to be some room to reduce
the drive to reduce both the distance to, and the
prices of, rural health clinics to zero. Some selffinancing is probably feasibie, and attention to the
quality of public services may be more important to
their use than a low money price.
Considerable work must be done to improve the
estimation of this model. In addition, it should be
extended to include multiple visits and other services,
such as delivery and well-child care. Expenditure and
use patterns must also be more carefully analyzed to
ascertain which income groups benefit from free
government services.
Ackno~~(edgemenrs-The basic research for this project has
been supported by a grant from PPC,,PDR,USAID. Dr
Maureen Lewis of PPC,PDR is thanked for her assistance
throughout this project. The Bicol River Basin Development Program and the Office of Local and Regiona!
Development. AID Philippines are thanked for allowing us
to use their BMS78 data. In particular, David Heesen,
C. Stuart Callison and Don Wadley have been helpful. The
Social Survey Research Unit. Ateneo de Naga University
is also thanked for providing access to these BMS78 data.
The price and other community data were collected by the
Research Service Center. Ateneo de Naga University. They
are thanked for working with us on the collection of these

JOHN S. AKIN er al

328

data and with providing us with insights into the problems


ofcollecting
the price data. The authors contributed
equally
to this paper.

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