Patient Induced Demand

"Induced demand" is a commonly used health economics term. It can be due to 'supplier' that is provider or the patient.

Supplier induced demand is fairly specific for the healthcare industry. It almost always never occur in the retail industries. Generally, in conventional retail industry, the higher the demand for a particular product, the price will be higher for that particular product. This demand is not determined by the retailer. The retailer cannot says 'I want to increase the demand for this product', just to increase the price of the product that they are selling. It just won't happen.

In the healthcare industry, whenever a patient goes to see a doctor, the patient usually follows the advice of the doctor. If a patient has got a headache, and the doctor asked the patient to do a MRI of the brain, in most cases, the patient will 'agree' and follow. The question is, is a MRI really indicated for a headache? The answer is 'no'. The headache is likely to be tension related and resolve over time. This is especially so if the headache just started or will only occur during stressful period. The unnecessary ordering of an expensive investigation, in this case a MRI, is classic of a doctor 'inducing demand' of MRI to a patient. The patient, of course, have no choice but to pay for it.

Recently I come across a patient that works for a corporate company. She has got a medical card from a local insurance company that allows her to seek dental treatment. The limit of the card is RM1000 per year. The patient has got no problem with her teeth, but she thought that since its covered, my as well just go to the dentist and 'beautify' my teeth (whitening, scaling, etc). The dentist of course is happy because one client allows him or her to earn RM1000 extra just because 'the patient wants to fully utilize the insurance card'. The insurance company of course will not question the patient since it is a 'corporate benefit' for her. In this case, the patient herself induces a demand for healthcare and 'use up' a significant portion of her insurance benefit for her teeth that don't need 'treatment' at all.

Induce demands, whether, it is patient or supplier induced, push up healthcare costs significantly. This unethical use of healthcare resources should be stopped or risk even higher healthcare cost in the future. In the case above, if the insurance company realized that the utilization of healthcare card for dental treatment is high, the company will directly increase premium for those cards making employers to pay more for their employees healthcare benefits. For those employers that can't afford higher premium, more employees will loose out without any insurance coverage, or, the limit of RM1000, will now be RM500 per year. This viscous cycle occur continuously and at the end, the person that loose out will not be the doctor, nor the insurance company, nor the employer, but will be the employee.

Insurance are not meant for us to use 'for the fun of it'.