Supplier-induced demand for physiotherapy in the Netherlands

Empirical studies of supplier-induced demand in health care have mostly concentrated on the analysis of physician behaviour. In this article, the focus is on the economic determinants of physiotherapist behaviour in The Netherlands. It is shown that relative prices work as strong incentives to alter the mix of services supplied, conform to the model of revenue maximization under a production constraint. However, the time-series analysis also gives some indication that this ability to influence the demand for their services to increase hourly income is not fully exploited. The latter finding is inconsistent with pure income maximization but rather points to a trade-off between loss of revenue and demand manipulation. The fact that the choice of therapy varies with the pressure on provider incomes does cast some doubt on the appropriateness of the chosen patterns of treatment in terms of effectiveness.

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