The Nullification of the Supply and Demand Relationship

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It has long been recognized that the "laws" of supply and demand have not operated in the health care sector as they do in the general economy. This is because the physicians (and therefore the hospitals and other providers) have traditionally controlled both the supply and demand sides of health care. It is the doctor who determines what treatment the patient needs, what procedures should be rendered, and how long the treatment should last.

On the supply side the government subsidized the education and training of health care practitioners not only to relieve the critical shortage of a few decades ago, but also to create a surplus of providers. It was widely believed that once there was an ample supply of doctors, costs would go down. This is true in every other industry; a glut of workers results in cheaper wages. As the number of physicians increased beyond the number needed, costs went up instead of down. And the greater the glut, the greater the costs. Physicians, being in control of both supply and demand, merely rendered more treatment, and particularly more procedures, to a declining number of available patients. In practice-building seminars physicians were taught that it is not the number of patient visits, but the number of costly procedures that these visits generate, that enhance physician incomes.

In health economics such practices are termed demand creation, which nullify the effects of oversupply

(i.e., too many physicians). Of all of the health professionals, behavioral care specialists (including psychiatrists, psychologists, social workers, marriage and family counselors, master's level psychologists, and substance abuse counselors) are in the greatest over-supply. It would be expected, therefore, that demand creation would be a prevalent practice among psychotherapists and others who treat behavioral disorders. Examples abound, but some of the most widely recognized include the following, although most of these have been curtailed in the new health care environment (see Section IV).

The most obvious example of demand creation is to place the declining numbers of patients available to each practitioner in increasingly longer psychotherapy. One patient seen for 3 years is equivalent to three patients seen for 1 year each. MBCOs have eliminated this practice for all but the relatively few patients willing to pay out-of-pocket.

When the American Psychiatric Association, which publishes the Diagnostic and Statistical Manual of Mental Disorders (DSM), changed the definitions in DSM IV of attention deficit disorder (ADD) and attention deficit hyperactivity disorder (ADHD), it quadrupled the number of patients, especially children and adolescents, who would be eligible for treatment. The widespread medication of children and adolescents with psychotropic/stimulant drugs now includes increasing numbers of preschool children, prompting two White House Conferences on the subject in the year 2000.

Another form of demand creation is to create a syndrome for which the psychotherapist already has a treatment. Until recently multiple personality disorder (MPD) seemed to be increasing exponentially. Investigations by payors revealed that the number of patients ostensibly suffering from MPD was directly related to the number of therapists specializing in the therapy of MPD. Patients who had never shown a multiple personality in previous therapies suddenly developed the same when they began seeing a therapist who likes to treat MPD. Also, patients who changed therapists in the opposite direction (from one who specializes in MPD to one who does not) no longer complained of multiple personalities. The question is not whether MPD actually exists as a syndrome, but whether it exists in the sudden explosive numbers in which it was suddenly seen. It eventually became apparent that certain kinds of impressionable patients who want to please the therapist, and especially borderline patients, are highly suggestible and respond positively to all kinds of prodding, such as those designed to elicit the symptoms of MPD.

Another instance of demand creation, which disappeared as rapidly as it had emerged, was the so-called recovery of repressed memories of childhood sexual abuse, especially when it ostensibly involved incest. Many authorities believe the recovered memory was actually created by the hypnosis and other techniques designed to elicit it. During its heyday psychotherapists treating recovered memories proliferated and a significant number of accused persons (many of them the ostensible victims' fathers) went to prison, only to be subsequently found innocent on appeal, or to have their sentences commuted. Several psychotherapists have lost their licenses, and the courts have effectively put an end to the treatment of this syndrome.

The diagnostic criteria of depression are constantly shifting toward including more and more of what has previously been regarded as usual, normal mood swings experienced by all individuals as part of daily living. Undoubtedly much of clinical depression is missed by the physician, but some estimates that at any given time 40% of individuals seeing a physician may be suffering significant clinical depression requiring psychotherapy seems high to most observers. The movement to increase the awareness of depression has gained important advocacy from the wife of the Vice President of the United States, who herself suffered a depression when her daughter was killed in an automobile accident. It has yet to be determined how much may be an important unrecognized demand for which the health care system must develop means of identification, and how much might be demand creation being fostered by providers. In either case, depression that is real and undiagnosed will reveal itself in the health care system under a different guise that will, nonetheless, increase health care costs.

Economists would stress that even though the provider may be in a conflict of interest at times with efforts to control demand, few practitioners would cynically set out to inflate costs. Their avowed intent is that the patient should receive all necessary health services. Nonetheless, one authority has referred to a process of "unconscious fiscal convenience" in describing the conflict between providers and the health system.

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