Identification of Physician-Induced Demand

Whether market failure exists in the health care sector, because physicians induce demand in their own self-interest, has not been clearly addressed because of identification problems. A model is developed which includes the patient's financial burden as a limiting factor on demand inducement....

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Bibliographic Details
Published in:The Journal of human resources 1984-04, Vol.19 (2), p.231-244
Main Authors: Rossiter, Louis F., Wilensky, Gail R.
Format: Article
Language:English
Subjects:
Ambulatory care
Demand
Economic competition
ECONOMIC DEMAND
Economic models
ECONOMIC VALUE
HEALTH (ALSO SICKNESS AND DISEASE)
Health care expenditures
Health insurance
Health services
Health status
Human resources
Market demand
MODELING, MODELS
Money prices
NATIONAL HEALTH INSURANCE
Patient care
PHYSICIANS
ROLE, REFERENCE GROUP, CROSS-PRESSURES
Self interest
Statistical analysis
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Summary:Whether market failure exists in the health care sector, because physicians induce demand in their own self-interest, has not been clearly addressed because of identification problems. A model is developed which includes the patient's financial burden as a limiting factor on demand inducement. New data from a national survey are used to test the demand inducement hypothesis and identify physician-initiated expenditures. When individual health insurance and other factors are held constant, additional corroboration of the physician-induced demand hypothesis is found, but the magnitude of the effect is very small and is statistically significant only for more discretionary expenditures.
ISSN:0022-166X
1548-8004
DOI:10.2307/145565