The Impact of Supplier Induced Demand on Increase in Medical Aid Expenditure

Abstract

Background: A need arises to efficiently control health expenditure for medical aid due to a sharp increase in medical aid expendi-ture. This study experimently analyzes the impact of physician behavior on medical use for medical aid beneficiaries using supplier induced demand (SID) theory. Methods: This study looks into analyze SID effect using expenditure factor analysis of medical aid for the years between 2003 and 2010 in comparison with health insurance. Moreover, this study analyzes the existence and scale of SID using econometrics model-ing with panel data on 16 cities and provinces`s health expenditure data for medical aid from 2003 1/4 to 2010 4/4. Results: This study finds that the growth rate of visit days per capita and treatment amount per visit days for medical aid is higher than health insurance. Furthermore, the result of econometrics modeling analysis shows the existence of SID in general hospital, hospital, clinic, oriental clinic. Conclusion: In order to efficiently control expenditure for medical aid, it is required to reinforce macro polices such as the introduc-tion of ``target management`` and micro policies such as the strengthen of management on medical institutes in the perspective of suppliers as well as regulations of demanders.