Physicians' perception of demand-induced supply in the information age: a latent class model analysis

This paper introduces a concept called 'demand-induced supply' that reflects the excess supply of services due to an increase in demand initiated by patients. We examine its association with the proportion of information-savvy patients in physicians' practice. Using data from a national representative physician survey, we apply latent class models to analyze this association. Our analyses categorize physicians into three 'types' according to the frequency with which they provided additional medical services at their patients' requests: frequent, occasional, and rare. The proportion of information-savvy patients is significantly and positively correlated with demand-induced supply for the frequent or occasional type, but not among physicians in the rare type. Efforts to contain healthcare costs through utilization control need to recognize the pattern of responses from physicians who treat an increasing number of information-savvy patients.