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Examining supplier-induced demand under regulated fees: dynamic panel evidence from Iran
Cyrus Alinia1,2, Hasan Yusefzadeh1
1Department of Health Economics and Management, School of Public Health, Urmia University of Medical Sciences, Nazlu Road Campus (Kilometer 11 of Sarv Road), Urmia 57561-15198, West Azerbaijan Province, Iran.
Health Policy and Planning
|March 31, 2026
Summary
Higher ophthalmologist density in Iran correlates with increased cataract surgeries, suggesting supplier-induced demand. Policy reforms are needed to ensure procedures align with clinical necessity and system efficiency.
Area of Science:
- Ophthalmology
- Health Economics
- Health Services Research
Background:
- Cataract surgery is a common, cost-effective procedure globally and in Iran.
- Rapid growth in cataract surgeries, especially under fee-for-service models, raises concerns about supplier-induced demand (SID).
- Understanding utilization patterns is crucial for healthcare system efficiency.
Purpose of the Study:
- To investigate the relationship between ophthalmologist density and cataract surgery rates in Iran.
- To examine the influence of supply-side factors on cataract surgery utilization.
- To provide evidence for policy interventions to optimize healthcare resource allocation.
Main Methods:
- Analysis of administrative data from the Iranian Armed Forces Insurance Organization (108,055 surgeries, 644 surgeons).
- Regression-based methods to assess the impact of ophthalmologist density on surgery count, volume, and value.
- Inclusion of lagged service variables and income as determinants in dynamic models.
Main Results:
- A 10% increase in ophthalmologist density was associated with increased surgery count (4.9%-6.2%), service volume (7.3%-7.9%), and service value (1.5%-1.9%).
- Lagged service variables indicated significant clinical inertia.
- Income became a significant determinant only in the dynamic model, suggesting latent demand.
Conclusions:
- Findings support supply-sensitive utilization patterns in Iran's cataract surgery sector, consistent with SID theory.
- Evidence suggests both quantitative and qualitative dimensions of demand inducement by suppliers.
- Policy interventions, including payment reform and workforce distribution, are recommended to align provider behavior with clinical needs and system efficiency.
