Competition and physician-enabled demand: The role of managed care |
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| Authors: | Hai Fang John A. Rizzo |
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| Affiliation: | aDepartment of Health Systems, Management, and Policy, Colorado School of Public Health, University of Colorado Denver, 13001 E. 17th Place, 3rd Floor, Campus Box B119, Aurora, CO 80045, USA;bDepartment of Economics, Stony Brook University, S-637 Social and Behavioral Sciences Building, Stony Brook, NY 11794, USA;cDepartment of Preventive Medicine, Stony Brook University, HSC 3rd Floor, Stony Brook, NY 11794, USA |
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| Abstract: | Recent organizational changes in the health care sector promote greater patient participation in their treatment decisions. How physicians respond to patient-initiated requests for treatment is an issue of considerable policy interest. To study this phenomenon, we introduce the notion of physician-enabled demand and examine empirically whether this behavior responds to competitive pressures in the market and financial incentives associated with different physician payment mechanisms.We find that physician-enabled demand increases with more competition under fee-for-service reimbursement, but decreases with greater competition under managed care. This asymmetric response is quite consistent with our conceptual framework and at odds with alternative interpretations. |
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| Keywords: | Competition Physician-enabled demand Managed care |
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