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 Table of Contents  
ORIGINAL ARTICLE
Year : 2014  |  Volume : 2  |  Issue : 2  |  Page : 78-83

Experts' perspectives on barriers due to induced demand in health services


1 Department of Health Services Management, Social Determinate of Health Research Center, Isfahan University of Medical Sciences, Isfahan, Iran
2 Department of Health Services Management, Health Management and Economics Research Centre, Isfahan University of Medical Sciences, Isfahan, Iran
3 Department of Health Services Management, Faculty of Management and Medical Informatics, Isfahan University of Medical Sciences, Isfahan, Iran

Date of Web Publication18-Aug-2014

Correspondence Address:
Elahe Khorasani
Department of Health Services Management, Isfahan University of Medical Sciences, Isfahan
Iran
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Source of Support: None, Conflict of Interest: None


DOI: 10.4103/2347-9019.138931

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  Abstract 

Introduction: Induced demand is a debatable subject in health care economy. It is defined as inducing provision, care and delivers an inessential service to clients of health care system using provider's power. It eventually increases health care costs and catastrophic cost index by confronting unlimited needs and limited resources. This article aims to investigate the barriers due to induced demand in health services with the use of expert's experiences of Isfahan University of Medical Sciences. Materials and Methods: This is a qualitative research. Semi-structured interview was used for data gathering. Participants in this study were people who had been informed and experienced in this regard and were known as 'experts'. Total of 17 people were interviewed by purposive sampling and some criteria such as data "reliability of information" and "stability" were considered. The anonymity of the interviewees was preserved. The data were transcribed, categorized, and then the thematic analysis was used. Results: In this study, thematic analysis was conducted so that three themes and 41 sub-themes were extracted. The three main themes include insurance organizations barriers, health systems barriers, and patient's barriers. Each of them has some sub-themes. Discussion: The results of this study provide barriers due to induced demand. The most notable findings include double financial pressure on insurance, unreal expectations of the insurance to confirm non-essential drugs, inappropriate allocating the resources reducing the service quality, damaging equity in health system, reducing economic productivity, rising health care and diagnostics costs, patient's confusion and causing undue influence on patients. These findings will help health policy-makers consider challenges of design appropriate strategies to reduce them.

Keywords: Barriers, health services, induced demand


How to cite this article:
Keyvanara M, Karimi S, Khorasani E, Jazi MJ. Experts' perspectives on barriers due to induced demand in health services. Int J Health Syst Disaster Manage 2014;2:78-83

How to cite this URL:
Keyvanara M, Karimi S, Khorasani E, Jazi MJ. Experts' perspectives on barriers due to induced demand in health services. Int J Health Syst Disaster Manage [serial online] 2014 [cited 2024 Mar 28];2:78-83. Available from: https://www.ijhsdm.org/text.asp?2014/2/2/78/138931


  Introduction Top


During the last three decades, health costs have substantially increased in different countries. [1] To explain the increasing rate, some factors such as income levels, technology development and age composition of the population in macroeconomics should be taken into consideration. In addition, economists and policy-makers consider the economic efficiency of health care systems. In this regard, the economists focus on inefficient demand. Inefficiency of potential demand is another important aspect in this problem. This inefficiency may induce the demand to the patient due to the healthcare provider's behavior. [2] Induced demand is a debatable subject in health care economy. [3],[4] In fact, it is defined as inducing provision, care and delivers an inessential service to clients of health care system using provider's power. [5],[6] Knowing the importance of its effect on different aspects of policy-making, it is apparent that the main important purpose of health care economy is induced demand.

Induced demand is a challenge in country's health care system. It eventually increases health care costs and catastrophic cost index by confronting unlimited needs and limited resources. It is a complicated and multi-dimensional phenomenon [7] which damages the efficiency of allocating national resources. Even if the patient is to pay the charge, the national income is not allocated through efficient cost. By increasing demands it may unbalance the supply and demand in the health market. It also imposes extra costs on the patient and wastes his time. Sometimes, wrong diagnoses and treatments outbreak medical complications on the patients. Alternatively, the national economic losses are substantial especially in the case of government's paying subsidy for medical services and pharmaceuticals. [8],[9] From the policy-makers' point of view, induced demand may have two major effects: First, it increases healthcare castor pressurizes general government budget. Second, it decreases the efficiency because national resources support the kind of cares with low benefits. [10]

More than a decade ago, Hadley et al., argued that researchers should focus on the consequences of induced demand more than the content of its theory. They also demonstrate that a more apparent conceptual framework should be designed. [11] According to the reflection of different dimensions of induced demand, extensive induction consequences for the society should be examined from the view point of its effect on the patient's welfare and health instead of contenting with restricted concept of imperfect relation. [10] Induced demand phenomenon is probably to emerge in Iran's healthcare system. It can provide lots of challenges for the healthcare system and more importantly the patient and prevent them from accessing the main and essential services. As a result, the present article is to examine the challenges of induced demand using the experience of the experts of Isfahan University of Medical Sciences.


  Materials and Methods Top


The present research is a qualitative study that has been conducted in 2013, using in-depth interview. The participants include some faculty members, physicians, hospital managers, directors of insurance organizations, and researchers in health economics with the experience in executive activities and management in health system. These people had acceptable executive or scientific experience in health system and were also familiar with Induced Demand.

The method of sampling was purposive. In other words, the interviewees were informed people with enough experience in this regard. Sample size fitted to the data saturation. Accordingly, seventeen in-person interviews were conducted, recorded, and written on paper. The time of the interviews varied between 30 and 90 minutes.

For the validity of the research, the researcher conducted several interviews on a trial basis in advance, with the help of the advise, experience, and assistance of the supervisors and the advisors. Then, for the data reliability, the veracity of the first interviews was considered by the supervisors and the advisors.

When the revisions finished, the researcher began the work. For increasing the reliability, the data was extracted and referred to some participants and their viewpoint was considered. Some criteria such as "data reliability, "assurance", and "stability" were also considered. The method of the analysis of the data is based on the thematic analysis.

Stages of data analysis stages included extraction of data, writing them on paper, storing them in the computer, immersion in the data, coding, reflexive remarks, marginal remarks, memoing, and developing preposition. In the first stage after each interview, the text was transcribed, then, typed and stored on a computer immediately. In the next stage, the interview texts were examined and reviewed several times so that the researchers dominated the data. In the third stage, the data was categorized into semantic units (code) in the form of sentences and paragraphs related to the main meaning. Semantic units were also reviewed several times. Then an appropriate code was written down for each semantic unit. Accordingly, in each interview, sub-themes were separated, and further integrated, and reduced. At last, the main themes were recognized. Reflective and marginal rein fact, ideas and viewpoints emerging in the researcher's mind were recorded during the interview and analysis. These signs related the notes to the other parts of the data. Morality was also considered through gaining the interviewees' satisfaction. They were also informed that interviews are being recorded for the purpose of easy transcription. Anonymity of the interviewees was preserved and the participants were assured that the information is confidential.


  Results Top


In this study, 41 sub-themes and three themes were extracted based on the conducted thematic analysis. The three main themes include: Insurance organizations barriers, health systems barriers, and patients' barriers [Figure 1].
Figure 1: Barriers due to induced demand

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Insurance organization barriers

According to the examination of participants' ideas, insurance organizations challenges were classified in the form of two main themes: "Economic challenges and structural challenges".

The participants stated insurance "economic challenges": As "double financial pressure on insurance, increase in insurance debts, and keeping the insurance tariff slow.""[Induced demand] imposes us (insurance) some so-called inessential costs that causes us to stay away from essential costs." (Interview number 8)."Because we do not have any money. Our money is useless …I mean we are wasting money in induced demand and in other case sand we have to keep the tariffs low." (Interview number 5).

From the participants' point of view, "structural challenges" for insurance organizations are: "Covered services being limited, insurances getting inefficient, unreal expectations of the insurance to confirm non-essential drugs, and physicians' fraud toward the insurance for offsetting the deductions". "Our service package is limited. I mean …now… a patient refers to us for joint repair, he really needs that repairing but it is not our commitment. Or a patient who needs a cheap medicine is referred to us; it is not our commitment as well" (Interview number 5)." It leads to Inefficiency of institutions covering the services and insurance organizations. As a result, their capacity to cover the services will be reduced."(Interview number 2).

Health system barriers

Participants mentioned health system barriers caused by induced demand as: "Tricks with unusual therapies, damaging equity in health system, reducing productivity in health system, reducing the service quality, excessive development of new technologies, economic consequences for health system, accessibility challenges, inappropriate allocating resources, increasing the service demand, disruption of physicians' position in public opinion. "They said:" Take a look at the events' page. You read every time that a fortune-teller has tried to treat a patient. Patients with disappointment are referred to them. They claim to be able to treat them. "(Interview number 7)."economy treatment states that everyone who is in need of further treatment should own more facilities. In fact, a kind of equity is applied in treatment. But in the case of inducing the demand in treatment, there is no equity" (Interview number 7)." In general, [Induced demand] will even reduce the average life expectancy and health. Health system productivity will also come down. "(Interview n. 8, 9) "Services quality also reduces. I mean … a patient refers to me having done a test to check the blood sugar and I really cannot count on the test's result" . (Interview number11) "The resources that can be used for doing away with the fundamental problems of our patients have focused on the demands of the induction." (Interview number 13). "The trust in the medical community will be lost. Position and sanctity of the medical community becomes spoiled" (Interview number 2).

Participants evaluated the "economy consequence" caused by induced demand for health system important and according to their viewpoint the consequences include: "Reducing economic productivity, reducing costs in the prevention sector, currency loss, wasting a large amount of financial resources on false advertising, rising health care and diagnostic costs and the annual increase in the health share of GDP (Gross domestic product)."

"reduces the economic productivity and imposes unnecessary costs to the health system whereas they could be spending on the health sector, for example." (interview number 8 and 9), "this is the currency loss.If we were self-sufficient; these costs would flow into our country."(interview number 8 and 9) "Advertisements…these problems happen to the common people.Billions of dollars are spent in false and deceptive advertising through complementary medicine " (interview number 15). "What happens is that our total cost of treatment rises. Now if you look at the numbers, we have had a descending course in the past few years" (interview number 1).

Induced demand may provide barriers to access the health services so that the participants in the "Access Challenge" raised these themes: "Denial of service, ignore the basic services, not providing a real treatment by the authorities." "Finally makes people not reach the health care affordable service they want to serve." (interview number 15)"Some doctors choose to work in some government agencies but receive less than they reserve and that is why if, for example he is a surgeon, he prefers not to do a surgical operation in that center" (interview number 11).

Patient barriers

Participants expressed the patient barriers arising from induced demand as: "Social challenges, cultural challenges, economic challenges, and adverse effects". They also expressed social challenges as: "Causing undue concern in patients, patient confusion, and family problems and disrupting the ordinary lives of people." "They even suffer from social and psychological damages. When they get concerned that something is going wrong but in fact there is no problem, puts a negative impact on the individuals subjective and quality of life naturally reduces, and it can also socially know as a problem." (interview number 13)" When a patient referring to a medical center receives no response, he has to refer to other centers to find a doctor who is able to diagnose his illness. It is confusion, continuously seeing different doctors." (interview number 8 and 9)"we also have its cultural consequences…when a patient sees a doctor and something happens to him, then, he or she become conspicuous in community.0" (interview number 10).

Participants expressed patient's "economic challenges" due to induced demand as: "The cost of imposing a financial burden on people, increasing out of pocket costs, catastrophic costs, wasting time and allocating family income to unnecessary health expenses." "Families and patients are pressurized; however, patients pay their portion of the costs."(interview number 2) "People themselves have to pay part of the costs that is not cost by the insurance. These issues lead the health to a particular side which is not something appropriate." (interview 16)"As a result, when an individual refers to them, he will lose the golden time, it means the best time he could be treated."(Interview number 15).

Participants for the "adverse effects" demonstrated different concepts such as: "For instance, a patient after angiography gets allergic to the contrast agent and experiences anaphylaxis shock and may never been treated"(interview number 5) "it should make the person who has requested an inessential demand to tolerate the pain." (interview number 4) regardless of the fact that, in addition to his illness, the patient may experience a kind of health hazard, suppose in taking inappropriate medication, when a drug is consumed inappropriately. It may cause dangerous side effects to the patient." (interview number 2) "When X-ray is done to a patient who does not need to graph and the radiation affects his body. If the amount of radiation goes up a lot, it will show the symptoms over the years. " (interview number 12)


  Discussion Top


The purpose of this paper was to examine the challenges posed by induced demand for health services withthe experiences of experts in Isfahan University of Medical Sciences. Thefindings demonstrated that induced demand leads to an uncontrolled growth in costs, and imposes unnecessary and extra costs and creates a financial burden to the insurers. Another economic consequence is increasing the insurer's liability. Because limited resources of these organizations are not able to cover the increasing service demand. As a result, insurance's debt to hospitals and other health services increases. It may also make the insurers cancel their contracts. However, induced demand leads to cutting down the tariffs. Fabbri and Monfardini argue that induced demand greatly affects the health insurance market. [12] Saul in his report states that many patients are referred for financial benefits. It costs about $40,000 per patient that is paid by the Medicare. [13] Research findings related to health shows that induced demand leads to the development of non-conventional therapies which provides the background for deception. On the one hand, induced demand breaks the equity in health because treatment is not provided in accordance with the actual needs of the patient. Cline came to the conclusion that induced demand unbalances the supply and demand in the health market. [5] Amporfu demonstrates that changing demand with the influence of the physician challenges the market theory and the consumer sovereignty. [14] His study shows the reduction of health efficiency challenge that is consistent with the current research. Increasing unreal needs, leads to the lower quality of services. Labelle et al., suggest that the self-interest of the physician and information asymmetry in the induced demand causes poor services. [15] Spread over of much new technologies is another challenge for induced demand. Palesh et al., found that uncontrolled proliferation of health technologies is one of the factors that increase pressure on health systems. [16]

The economic consequences of induced demand for health system are also very important. Increased burden of costs associated with the induction of non-essential services leads to reduction of paying in other sectors, particularly in health and prevention. Extensive use of drugs without indication and imported equipments leads to loss of country's currency. One of the significant outcomes of induced demand is increasing healthcare and diagnostic costs. Even the induced demand is likely to increase the cost of each service because the set of services provided at each visit has increased. It is palpable that high clinical costs and unnecessary requests have a significant part in increasing the costs. The pharmaceutical sector is no exception to this thread. Large amount of resources have been assigned to drugs with increasing induced demand.

Izumida et al., evaluated the economic losses at the national level as a high rating, particularly, when subsides are paid for medical services by the government. [8] Broomberg and Rice rose that induced demand has a far-reaching impact on health care costs. [17] Amporfu states that induced demand could increase medical costs. It causes inefficiencies and significantly hinders the development of the health sector. [14] Falit et al., explain that urologists who are responsible for cancer centers have provided great cost to America. [18] McGuire states that induced demand hypothesis have had a fee equivalent to 6.5% physician payments in 1992. [19]

Induced demand also leads to the inappropriate allocation of resources. It makes the resources use for consumers who have no real need for services instead of using for real patients. As the effect of induced demand, efficiency in allocating national resources will be distorted. Even if the costs were to be paid by the patient, national income has not been allocated in the form of effective cost. Fabbri and Monfardini argue that induced demand affect the allocation of competitive services. [12] Cromwell and Mitchell states that policy-makers are highly concerned about the high costs of unnecessary medical cares especially those of surgical operations. [20] Borhanzade also conveys social consequences of induced demand as wasting financial resources, increasing false demands for services, and therefore making black markets in the health system, work density, and losing opportunities for the patients who need the services and are in priority to receive the services. [21] By induced demand occurring, the physician position even is disrupted in public and at last, the trust between doctor and patient become poor.

The research findings in relation to the patient's challenges showed that without a real concern, a social harm is caused to the patient and reduces his life quality. However, one of social consequences is patient's confusion without a real reason. Family problems are also another social consequence that may have been suffered by the patient's family due to the cost and emotional burden of inducing non-essential services. The other social consequence is disrupting individual's normal life. An individual receiving false service may get involved in a cycle of services and may have to pay a lot and finally the patient should bear the side-effects. Another challenge happening to the patient is the cultural challenges. Getting an exhibition of oneself due to false treatments in the society is a kind of this challenge.

By increasing the demand for services, the costs also increase. Consequently, the financial burden is imposed and people have to pay themselves. It may even have been true about catastrophic costs and, therefore, most patients meet the poverty line. The patient has to pay intangible costs for wasting his time and his valuable life on unnecessary services. In this regard, patients' families have to allocate their income to unnecessary health costs. Compared with the previous studies, Abdoli concluded that induced demand leads to increasing the consumers' expenses and imposes costs on patients and at last reduces their welfare. [7] Induced demand increases people's costs and also increases the catastrophic costs index. Izumida et al., stated that induced demand imposes extra costs on patient and wastes his time. [8] Tussing and Wojtowycz concluded that Induced demand has important implications for the economic well-being of the patient. [22] Dranove suggests that doctors induce the demand by offering services that are not consistent with the cost-benefit of the patient. [23] Amporfu suggests that induced demand may cause the patient with too expensive services with no health improvement. Cost increase may be due to the amount or nature of service. Induced demand may impose extra costs to the patients in their spent time in hospitals in the place of other options such as working. As a result, induced demand imposes indirect costs to the patient. [14] Borhanzade also argues the consequences of induced demand as disinvestment and time consuming. [21]

An important part of created problems for the patient is medical complications that may affect the patient physically or mentally. Even causing pain to the patient is also a case of treatment effect. The actual disease is often diagnosed late because of induced demand. Side effects of medications are also very significant and can be seen in today's indiscriminate use of steroids and painkillers. Even drug resistance as a result of overuse is an injury. Izumida et al., sometimes serve the induced demand with false diagnosis and treatment as a cause of implications in patients. [8] Borhanzade also serve the consequences of induced demand for the patients as: Bacterial resistance to antibiotics caused by improper use, suffering and stress tolerance, complications from unnecessary drugs, complications due to unnecessary surgery as an abscess of a surgical organ, adherence, infection, deformed appearance, depression caused by illness, and patient's confusion. [21]

This paper aimed at assessing the challenges caused by induced demand with the use of experts' experiences in Isfahan University of Medical Sciences. The most striking findings of this study included the insurance organizations challenges, health systems challenges, and the patient challenges. These findings will help policy-makers, given the challenges, to design appropriate strategies to reduce them.

Further research in this regard could examine the quantitative effects caused by induced demand in the health care system, the insurance, and the patient. It is recommended to use some strategies such as strengthening medical ethics, regarding patient's needs, increasing awareness, reforming education and payment system, being of evidence-based, and preparation and dissemination of clinical guidelines to control the induced demand.

 
  References Top

1.Besley T, Gouveia M. Alternative systems of health care provision. Econ Pol 1994;19:199-258.  Back to cited text no. 1
    
2.Delattre E, Dormont B. Fixed fees and physician-induced demand: A panel data study on French physcians. Health Econ 2003;12:741-54.  Back to cited text no. 2
    
3.Andersen LB, Serritzlew S. Type of services and supplier-induced demand for primary physicians in Denmark in Danish Public Choice Workshop. 2007, Department of Political Science and government: København. Available from: http://pure.au.dk/portal/en/publications/type-of- services- and-supplierinduced-demandfor-primary-physicians-in-denmark (b83bbd20-bc2b-11db-bee902004c4f4f [Last accessed on 2012 Oct 19].  Back to cited text no. 3
    
4.Richardson JR, Peacock SJ. Reconsidering theories and evidence of supplier induced demand. Centre for Health Economics, Monash University: Australia. 2006. Available from: http://www.buseco.monash.edu.au/centres/che/pubs/rp13.pdf [Last accessed on 2012 Sep 08].  Back to cited text no. 4
    
5.Cline RR, Mott DA. Exploring the demand for a voluntary Medicare prescription drug benefit. AAPS Pharm Sci 2003;5:E19.  Back to cited text no. 5
    
6.Crane TS. The problem of physician self-referral under the Medicare and Medicaid antikickback Statute. The Hanlester Network case and the safe harbor regulation. JAMA 1992;268:85-91.  Back to cited text no. 6
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7.Abdoli G. Induce demand theory of the information asymmetry between patients and doctors. Econ Res J 2005;68:9-114.  Back to cited text no. 7
    
8.Izumida N, Urushi H, Nakanishl S. An empirical study of the physician-induced demand hypothesis: The cost function approach to medical expenditure of the elderly in Japan. Rev Popul Soc Policy 1999;8:11-25.  Back to cited text no. 8
    
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12.Fabbri D, Monfardini C. Demand induction with a discrete distribution of patients., Dept. of Economics, University of Bologna . 2001.  Back to cited text no. 12
    
13.Saul S. Profit and questions as doctors offer prostate cancer therapy. N Y Times Web 2006:A1, C7.  Back to cited text no. 13
    
14.Amporfu E. Private hospital accreditation and inducement of care under the ghanaian national insurance scheme. Health Econ Rev 2011:1:13.  Back to cited text no. 14
    
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16.Palesh M, Tishelman C, Fredrikson S, Jamshidi H, Tomson G, Emami A."We noticed that suddenly the country has become full of MRI". Policy makers′ views on diffusion and use of health technologies in Iran. Health Res Policy Syst 2010;8:9.  Back to cited text no. 16
    
17.Broomberg J, Rice MR. The impact of the fee-for-sevices reimbursement system on the utilisation of health services. Part I. A review of the determinants of doctors′ practice patterns. S Afr Med J 1990;78:130-2.  Back to cited text no. 17
    
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20.Cromwell J, Mitchell JB. Physician-induced demand for surgery. J Health Econ 1986;5:293-313.  Back to cited text no. 20
    
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23.Dranove D. Demand inducement and the physician/patient relationship. Econ Inq 1988;26:281-98.  Back to cited text no. 23
    


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