Supplier inducement – its relative effect on demand and utilization

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Abstract
The present study examined the relative effect of supplier inducement on demand as opposed to on utilization. Supply of dentists was measured as population: dentist ratio at the level of trade areas. The dependent variable was number of dental visits during the last year. The probability of having any visit was used as the measure of demand. Number of visits, conditional upon having any visit, was used as the measure of utilization. The data were analyzed using Tobit analysis. This analysis gave the fraction of the total effect of a marginal increase in supply that is due to an increase in utilization as opposed to an increase in demand. The analysis was performed on a national sample comprising 1186 adult Norwegians. Supplier inducement had nearly the same effect on demand as on utilization. This finding may be a result of the payment system for dental care, which relates each item of service to the average time it takes to perform that item. Income opportunities for dentists are then fairly independent of whether they spend their time doing check-ups or treatment. The finding indicates that supplier induced demand is a factor to consider in addition to supplier induced utilization when one tries to explain how supplier inducement may affect the unequal distribution of dentists.