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.