Competition-driven physician-induced demand

This paper empirically investigates how competition affects physicians' opportunistic behavior in the context of the utilization of MRI scanners. We examine micro-panel data on Japanese hospitals, where we observe how physicians change their usage of MRI scanners in response to MRI adoption by nearby hospitals. We identify competition-driven physician-induced demand: Hospitals lose patients because of MRI adoption by nearby hospitals, and, to compensate for this loss, physicians perform more MRI scans per patient. Although competition may benefit consumers through better access to MRI scanners, it also causes additional physician-induced demand.

Automated summary

Competition affects physicians' opportunistic behavior in the context of MRI scanners utilization, leading to physician-induced demand. Despite potential benefits for consumers in terms of access to MRI scanners, competition can also result in increased MRI scans per patient due to physician-induced demand as hospitals lose patients to nearby competitors.