The demand for hospital outpatient services

In an investigation of the role played by hospital outpatient services in medical care delivery, objectives were to identify the factors which influence the demand for these services; and to determine the relationship between outpatient service volume and the availability and price of alternative sources of care, particularly office-based physicians and hospital inpatient services. Data were from a merged national data set containing population, socioeconomic, health services, manpower supply, and cost information. Two methods were used to examine demand for hospital outpatient services. The first replicated the earlier work by Davis and Russell using more recent (1978 versus 1969) and more geographically defined (Health Service Area versus state) data. The second extended this work, using the improved availability of data to estimate demand equations, distinguishing between emergency room and other outpatient visits. The results confirmed and extended the findings of earlier efforts. The level of hospital outpatient services appears related both to the availability and the price of other sources of care, as well as to insurance coverage and other factors. These findings have implications for reform of hospital outpatient reimbursement, for cost containment under Medicaid, and in related areas.