The determinants for the number of outpatient hospital treatments across Danish municipalities are analysed using balanced panel data from the period 1998-2004. The determinants include socio-demographic variables, home help service, residential homes capacity, proxy variables for morbidity, utilisation of primary care services, accessibility of hospitals and a number of other factors. Panel effects in the form of intramunicipal correlation and heterogeneity across years are controlled for. Spatial spillover effects across municipalities will be investigated in order to disclose the spatial dynamics of outpatient treatments. The results reveal substantial heterogeneity and dependency across time, as well as presence of a significant spatial spillover effect. Reverse causalities among the number of hospital outpatient treatments and certain health systems characteristics are further controlled for. The results are shown to be highly sensitive to such adjustments, as the effects of determinants-including those over which the municipalities exert some control-are seriously overestimated if such features are ignored.