Supplier-Induced Demand for Chronic Disease Care in Japan: Multilevel Analysis of the Association between Physician Density and Physician-Patient Encounter Frequency

There are currently large regional variations in the frequency of physician-patient encounters for the treatment of chronic lifestyle diseases in Japan. These variations may be influenced by competition among physicians, and supplier-induced demand (SID) in health care can occur when physicians manipulate their patients’ demand for medical services to increase the use of health care. To analyze patient data to investigate the presence of SID in the treatment of chronic diseases at the regional level in Japan. We tested the hypothesis that clinic and hospital physicians in areas of high competition (high physician density) are more likely to recommend a sooner follow-up consultation than do those in areas of lower competition (lower physician density). Using random-effects multilevel models, we analyzed patient survey data and administrative claims data to estimate the effects of physician density on encounter frequency and medical charges. In the analysis of claims data, we used the mean drug administration period as a proxy for the frequency of physician-initiated encounters. Our analysis showed that encounter frequency was significantly associated with clinic physician density, but there were no consistent associations with hospital physician density. Increases in physician density were significantly associated with increases in both clinic and hospital medical charges, and these associations were independent from encounter frequency. The results of our study indicate the presence of SID in Japan. Further studies should investigate whether more frequent physician-patient encounters provide clinical advantages to patients.