"Provider-induced demand (PID) is an economic term that refers to a greater demand for services than what would otherwise be expected in a perfect market. In this context, the term provider refers to physicians who care for patients in different reimbursement models.
In a recent JAMA Surgery article,1 the authors evaluate how fee-for-service (purchased care/PC) surgical rates for carotid artery stenosis differ from those of salaried surgeons (direct care/DC) in the military system. Recent clinical practice guidelines for this condition promote the use of nonsurgical intervention for most patients.
Patients in the PC were more likely to receive surgery at an odds ratio of 1.629. This odds ratio translates to an almost 63 percent increase in the risk of having surgery in the PC vs. DC groups. The authors conclude that the results support the conclusion that PID may be at work.
PID in Spine Care
The JAMA Surgery paper should trigger thoughts of a familiar problem in spine care: the use of invasive treatments for degenerative spinal conditions. According to Weinstein,3 the United States has the highest rates of spine surgery in the world, despite incidence and prevalence rates of spine disorders similar to those found in other countries.
The Dartmouth Atlas of Healthcare4 reports on unwanted variation in surgery for spinal stenosis, defining unwanted variation as "the differences in care that are not explained by patient needs or preferences." The authors found that the rates of surgical decompression varied more than eightfold among hospital referral regions. They also state that the evidence supporting fusion surgery for spinal stenosis is lacking, with a large variation of satisfactory results existing. The rates of spinal fusion surgery varied even more than decompression, with a 14-fold difference among hospital referral regions.
Further evidence of PID can be found when examining changes in Medicare reimbursement fee schedules. On average, a 2 percent increase in payment rates results in a 3 percent increase in care provision for that service.2 The types of services affected by increases in payment rates are almost exclusively elective procedures, while services like chemotherapy and dialysis remain unchanged.
The authors of this article state that "financial incentives significantly influence physicians' supply of health care ... and that they adjust their provision of relatively intensive and elective treatments as reimbursements rise."
Clemens, et al., provide a perfect summary of the problem as described in the previous discussion: "When physicians value patient health, services with a clear benefit for some patients, and potential harm for others, should respond less to payment rates." This is clearly not the case when it comes to several surgical procedures classified as elective. While clinical practice guidelines clearly recommend against invasive treatment and imaging procedures except under very specific circumstances, clinicians clearly are not getting the message.
This problem is sometimes referred to as the "know-do gap," and requires more emphasis on "knowledge translation." These topics will be covered in some detail in a future article.
References
- Nguyen LL, et al. Provider-induced demand in the treatment of carotid artery stenosis: variation in treatment decisions between private sector fee-for-service vs salary-based military physicians. JAMA Surg, 2017 (e-pub ahead of print).
- Clemens J, Gottlieb JD. "Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health?" Am Econ Rev, 2014;104:1320-1349.
- Weinstein JN, Lurie JD, Olson PR, et al. United States' trends and regional variations in lumbar spine surgery: 1992-2003. Spine, 2006;31:2707-2714.
- Martin, B. Variation in the Care of Surgical Conditions: Spinal Stenosis. A Dartmouth Atlas of Healthcare series. The Dartmouth Institute of Health Policy & Clinical Practice and Dartmouth-Hitchcock Medical Center.
Dr. Brian Anderson is an assistant professor in the Department of Clinical Practice at National University of Health Sciences and a PhD student in health sciences at Northern Illinois University. Contact him with questions and comments at
.