Do competition among physicians control physician induced demand: A case study in China

The Physician Induced Demand (PID) exists when the physician influences a patient’s demand for care against the physician’s interpretation of the best interests of the patient. In the sector of health economics, the problem related to the PID is a long-debated topic among the experts. In order to investigate whether the competition among physicians can control Physician Induced Demand (PID), this paper chooses two institutions in China located in Guangzhou and make a comparison between them. The internal and external conditions of two agencies are almost the same except the pressure of competition faced by physicians. As one of the institutions aims at serving high-end consumers, it has to compete with other hospitals in order to attract patients with enough ability to pay. Through the comparison of the average hospitalization costs (AHC), the strength of PID can be evaluated. According to the result, the AHC indicator in the institution with fierce competition is lower than that in another institution. That’s to say physicians face to the pressure of competition can effectively control PID.