Offering and Testing a Model to Explain the Physician Induced Demand in Iran

Subject Areas : medical documents

Abvalqasem Golkhandan ¹ , Elaham Fatholahi ²

1 - Ph.D. Student Economics, Faculty of Economics and Administration, Lorestan University, Khoram Abad, Iran, Correspondent author, Email: [e-mail]
2 - Ph.D. Student Economics, Faculty of Economics and Administration, Lorestan University, Khoram Abad, Iran

Received: 2017-02-22 Accepted : 2017-04-12 Published : 2017-02-19

Keywords: : Health Expenditures, Physician, Logistic Smooth Transition Regression (LSTR) model, Induced Demand,

Abstract :

Introduction: According to the physician induced demand hypothesis, health care demand may be due to asymmetric information in health market, is influenced by the behavior of health suppliers. This study first assumes that the number of physician reduced health expenditures, because of the increase the supply of health. But to achieve a specified level of physician, called threshold level, because of the physician induced demand hypothesis, competition between physicians, is leading to an increase in health spending. So, the major aim of this study is to evaluate the U shape hypothesis between the number of physicians and health expenditures in Iran. Methods: This study using time series data for 1971-2013, is investigated the possible non-linear relationship between per capita health expenditure (dependent variable), per capita physician (independent variable) and mortality rate (controlled variable). For this purpose, is used the Logistic Smooth Transition Regression (LSTR) model. Also, the statistical analyzes were performed using the EXCEL, EVIEWS and JMALTI soft wares. Results: The results of the model LSTR, in addition to confirm the nonlinear effects of per capita physician on per capita health expenditure, show that the per capita physician per 10,000 population, influence on the per capita health expenditure in the form of two regime structure with threshold level about of 12.24. So that, in the first regime, per capita physician had a negative impact on per capita health expenditure (disapproval the induced demand hypothesis), but this impact is positive in the second regime (confirm the induced demand hypothesis). So, U-shaped impact hypothesis of per capita physician on per capita health expenditure in Iran, is not rejected. Conclusion: Since at the moment the physician per capita per 10,000 population, is most of the threshold level, the country is located in the second regime. Accordingly, adopt more suitable policies to prevent from the induction of demand by physicians, is necessary. Introduction: This study first assumes that the number of physician reduced health expenditures, because of the increase the supply of health. But to achieve a specified level of physician, called threshold level, because of the physician induced demand hypothesis, competition between physicians, is leading to an increase in health spending. So, The major aim of this study is to evaluate the U shape hypothesis between the number of physicians and health expenditures in Iran.Methods: This study using time series data for 1971-2013, is investigated the possible non-linear relationship between per capita health expenditure (dependent variable), per capita physician (independent variable) and mortality rate (controlled variable). For this purpose, is used the Logistic Smooth Transition Regression (LSTR) model. Also, the statistical analyzes were performed using the EXCEL, EVIEWS and JMALTI soft wares.Results: The results of the model LSTR, in addition to confirm the nonlinear effects of per capita physician on per capita health expenditure, show that the per capita physician per 10,000 population, influence on the per capita health expenditure in the form of two regime structure with threshold level about of 12.24. So that, In the first regime, per capita physician had a negative impact on per capita health expenditure (disapproval the induced demand hypothesis), but this impact is positive in the second regime (confirm the induced demand hypothesis). Conclusion: Since at the moment the physician per capita per 10,000 population, is most of the threshold level, The country is located in the second regime.

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