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Identification of Physician-Induced Demand

Author

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  • Louis F. Rossiter
  • Gail R. Wilensky

Abstract

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.

Suggested Citation

  • Louis F. Rossiter & Gail R. Wilensky, 1984. "Identification of Physician-Induced Demand," Journal of Human Resources, University of Wisconsin Press, vol. 19(2), pages 231-244.
    • Handle: RePEc:uwp:jhriss:v:19:y:1984:i:2:p:231-244
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    Cited by:

    1. Pan, Jay & Qin, Xuezheng & Li, Qian & Messina, Joseph P. & Delamater, Paul L., 2015. "Does hospital competition improve health care delivery in China?," China Economic Review, Elsevier, vol. 33(C), pages 179-199.
    2. Haruko Noguchi & Satoshi Shimizutani & Yuichiro Masuda, 2008. "Regional variations in medical expenditure and hospitalization days for heart attack patients in Japan: evidence from the Tokai Acute Myocardial Study (TAMIS)," International Journal of Health Economics and Management, Springer, vol. 8(2), pages 123-144, June.
    3. Philippe Batifoulier & Nicolas Da Silva, 2014. "The economic behaviour of doctors: medical altruism without an ethic?," EconomiX Working Papers 2014-9, University of Paris Nanterre, EconomiX.
    4. Nolan, Anne & Nolan, Brian, 2007. "Income, Medical Card Eligibility and Access to GP Services in Ireland," Book Chapters, in: Nolan, Brian (ed.),The Provision and Use of Health Services, Health Inequalities and Health and Social Gain, Economic and Social Research Institute (ESRI).
    5. Paolo Buonanno & Matteo M. Galizzi, 2009. "Advocatus, et non latro? Testing the supplier-induced demand hypothesis for Italian courts of justice," Working Papers 0914, University of Brescia, Department of Economics.
    6. Nguyen, Xuan Nguyen, 1996. "Physician volume response to price controls," Health Policy, Elsevier, vol. 35(2), pages 189-204, February.
    7. Si, Yafei & Zhou, Zhongliang & Su, Min & Hu, Han & Yang, Zesen & Chen, Xi, 2020. "Re-Examining Supplier-Induced Demand in Health Care: Comparisons among Patients Affiliated and Not Affiliated with Healthcare Professionals in China," IZA Discussion Papers 13800, Institute of Labor Economics (IZA).
    8. Éric Delattre & Brigitte Dormont, 2000. "Induction de la demande de soins par les médecins libéraux français. Étude micro-économétrique sur données de panel," Économie et Prévision, Programme National Persée, vol. 142(1), pages 137-161.
    9. Chu-Shiu Li & Chwen-Chi Liu & Sheng-Chang Peng, 2013. "Expiration Dates in Automobile Insurance Contracts: The Curious Case of Last Policy Month Claims in Taiwan," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 38(1), pages 23-47, March.
    10. Antonio Clavero Barranquero & Mª. Luz González Alvarez, 2005. "A survey of econometric models to analyze the demand and utilisation of health care," Hacienda Pública Española / Review of Public Economics, IEF, vol. 173(2), pages 129-162, June.
    11. Buonanno Paolo & Galizzi Matteo M., 2014. "Advocatus, et non Latro? Testing the Excess of Litigation in the Italian Courts of Justice," Review of Law & Economics, De Gruyter, vol. 10(3), pages 1-38, November.
    12. E. Delattre & B. Dormont, 2000. "Testing for supplier-induced demand behavior : A panel data study on French physicians," THEMA Working Papers 2000-42, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    13. David Madden & Anne Nolan & Brian Nolan, 2005. "GP reimbursement and visiting behaviour in Ireland," Health Economics, John Wiley & Sons, Ltd., vol. 14(10), pages 1047-1060, October.
    14. Aoife Brick & Anne Nolan & Jacqueline O’Reilly & Samantha Smith, 2012. "Conflicting Financial Incentives in the Irish Health-Care System," The Economic and Social Review, Economic and Social Studies, vol. 43(2), pages 273-301.
    15. Noguchi, Haruko & Shimizutani, Satoshi, 2009. "Supplier density and at-home care use in Japan: Evidence from a micro-level survey on long-term care receivers," Japan and the World Economy, Elsevier, vol. 21(4), pages 365-372, December.
    16. Grytten, Jostein & Sorensen, Rune, 2001. "Type of contract and supplier-induced demand for primary physicians in Norway," Journal of Health Economics, Elsevier, vol. 20(3), pages 379-393, May.
    17. Zhou, Mei & Zhao, Shaoyang & Fu, Mingwei, 2021. "Supply-induced demand for medical services under price regulation: Evidence from hospital expansion in China," China Economic Review, Elsevier, vol. 68(C).
    18. Ya‐Chen Tina Shih & Ming Tai‐Seale, 2012. "Physicians' perception of demand‐induced supply in the information age: a latent class model analysis," Health Economics, John Wiley & Sons, Ltd., vol. 21(3), pages 252-269, March.
    19. Grytten, Jostein & Carlsen, Fredrik & Sorensen, Rune, 1995. "Supplier inducement in a public health care system," Journal of Health Economics, Elsevier, vol. 14(2), pages 207-229, June.
    20. Erin M. Johnson & M. Marit Rehavi, 2016. "Physicians Treating Physicians: Information and Incentives in Childbirth," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 115-141, February.
    21. Léonard, Christian & Stordeur, Sabine & Roberfroid, Dominique, 2009. "Association between physician density and health care consumption: A systematic review of the evidence," Health Policy, Elsevier, vol. 91(2), pages 121-134, July.
    22. Carlsen, Fredrik & Grytten, Jostein, 2000. "Consumer satisfaction and supplier induced demand," Journal of Health Economics, Elsevier, vol. 19(5), pages 731-753, September.
    23. Grytten, Jostein & Sorensen, Rune, 2007. "Primary physician services--List size and primary physicians' service production," Journal of Health Economics, Elsevier, vol. 26(4), pages 721-741, July.
    24. Maxime Menuet & Patrick Villieu, 2021. "Reputation and the “need for enemies”," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(4), pages 1049-1089, November.

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