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Related Experiment Videos

Physician-induced demand for surgery.

J Cromwell, J B Mitchell

    Journal of Health Economics
    |November 6, 1986
    PubMed
    Summary
    This summary is machine-generated.

    This study on surgeon-induced demand found that higher surgeon density correlates with increased surgery fees and utilization, indicating market failures. Findings support competitive market failure, especially in metropolitan areas.

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    Area of Science:

    • Health Economics
    • Medical Market Analysis
    • Physician Behavior Studies

    Background:

    • Builds upon prior research on surgeon-induced demand by Fuchs.
    • Addresses limitations in data and econometric methods of previous studies.
    • Investigates the interplay between neoclassical and inducement theories in surgical markets.

    Purpose of the Study:

    • To empirically test neoclassical and inducement theories of physician demand.
    • To estimate physician demand and equilibrium fees for surgical procedures.
    • To identify factors contributing to market failures in surgical services.

    Main Methods:

    • Employs a simultaneous equation model for estimation.
    • Utilizes data from 350 primary sampling units (PSUs) spanning 1969-1976.

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  • Tests alternative models including increasing monopoly and disequilibrium frameworks.

    • Main Results:

    • Provides strong evidence for competitive market failure, particularly in large metropolitan areas.
    • Higher surgeon density is associated with increased surgical fees and utilization rates.
    • A statistically significant, though small, price elasticity of demand for surgery was observed.

    Conclusions:

    • Findings support the concept of market failures in healthcare, where provider supply influences demand.
    • Surgeon availability significantly impacts surgery rates, even in areas with plentiful providers.
    • The study contrasts with Fuchs's findings on shift elasticities and price elasticity of demand.