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Competition among physicians, revisited.

R Feldman1, F Sloan

  • 1University of Minnesota.

Journal of Health Politics, Policy and Law
|January 1, 1988
PubMed
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Physicians may not significantly induce demand to bypass price controls. Government price setting for physician services may lead to suboptimal quantity and quality, potentially worse than unregulated markets.

Area of Science:

  • Health Economics
  • Physician Behavior
  • Market Regulation

Background:

  • A decade ago, a model of demand inducement in physician services was developed.
  • Empirical studies have since investigated demand inducement, with mixed findings.
  • Previous models assumed less than socially ideal service quantities.

Purpose of the Study:

  • To extend the demand inducement model to include variations in service quantity.
  • To re-evaluate the impact of government price setting on physician services.
  • To analyze the relationship between physician behavior, market regulation, and healthcare spending.

Main Methods:

  • Theoretical modeling of physician services market.
  • Analysis of demand inducement and its empirical evidence.

Related Experiment Videos

  • Extension of an existing economic model to incorporate service quantity variations.

    • Main Results:

    • Little evidence of demand inducement for primary care physicians.
    • Limited demand inducement observed in surgical services.
    • Government price setting may lead to inferior quantity and quality of services compared to unregulated markets.

    Conclusions:

    • Physicians' generation of demand to circumvent price controls is not well-supported by evidence.
    • The primary concern with price controls is not demand inducement, but reduced service quantity and quality.
    • Unregulated markets may provide superior physician services compared to price-controlled environments.