This paper considers the micro-econometric analysis of patients' hospital choice for elective medical procedures when their choice set is pre-selected by a general practitioner (GP). GPs have a dual role with regard to elective referrals in the English NHS, advising patients and at the same time taking account of the financial implications of referral decisions on local health budgets. The paper proposes a two-stage choice model that encompasses both patient and GP level optimization. It demonstrates that estimators that do not take account of strategic pre-selection of choice sets may be biased and inconsistent. We find that GPs as patients' agents select choice options based on quality, but as agents of health authorities also consider financial implications of referrals. When considering these choice options, patients focus on tangible hospital attributes, like amenities.
Keywords: Agent; Competition; Discrete choice; Elective medical procedure; Endogenous choice sets; Expert; GP; Hospital choice; Patient; Principal.
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