Do Physicians Induce Demand for Medical Services?
Journal of Health Politics Policy and LawPublished 1 June 1989
Thomas Rice, Roberta J. Labelle
Citations116
SJR quartileQ1
SJR score1.50
SNIP1.27
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TL;DR
In this critique, it is argued that the evidence on supplier-induced demand and physician responses to price controls does not support the conclusions drawn by Feldman and Sloan.
Abstract
In this paper we provide a critique of an article by Roger Feldman and Frank Sloan that appeared in the Summer 1988 issue of this journal. In that article, the authors contend that there is little evidence to support the notion of supplier-induced demand or the contention that physicians generate demand to avoid the impact on their incomes of government price controls. In this critique, we argue that the evidence on supplier-induced demand and physician responses to price controls does not support the conclusions drawn by Feldman and Sloan. We conclude with a discussion of the implications of the debate for policy formulation and future research.
Keywords
Economics, Econometrics and FinanceHealth ProfessionsPharmacology, Toxicology and Pharmaceutics
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It is shown that inducement should be expected in all imperfectly competitive markets that are also characterized by incomplete agency relationships, and that physicians are even more constrained, than is generally believed, in being able to induce increases in demand.