Studying supplier-induced demand in healthcare: an econophysics approach

Supplier-induced demand occurs when the supplier or physician, acting on behalf of the consumer or patient, generates a level of demand that surpasses what the consumer would have chosen if fully informed. Supplier-induced demand indicates the level of demand that exists beyond what would be seen in a market where consumers have complete information. In other words, the agency relationship between a patient and a physician stems from the patient's limited understanding of health, diagnosis, and treatment, which creates information asymmetry, requiring dependence on the physician's guidance. A perfect agent would suggest therapies that match the patient's needs and preferences, taking into account aspects like health issues and financial situations. Although health economics plays a critical role in understanding supplier-induced demand, this research seeks to illustrate the econophysics viewpoint of this occurrence. It specifically aims to clarify the mechanism by which supplier-induced demand develops, employing the principles of Newtonian physics. In this context, we propose interpreting supplier-induced demand through an econophysical perspective by integrating ideas from physics and economics to develop a novel conceptual framework. The mathematical structure of econophysics allows us to reproduce results through a single equation, indicating that specific patterns require monitoring.