Supply Efficiency Scoring

"Tapping the Brakes" on the growth of healthcare spending

Artificial Demand

Supply and demand don’t reach equilibrium in healthcare as one would expect from evidence in other economies. This is, in part, true because of the existence of what SES and others have called artificial demand.

In “Delivering health care in America” Douglas Singh points out a number of authors who have observed the creation of artificial demand: As early as 1985, Hemenway and Fallon noted that practitioners who have a financial interest in additional treatments also create artificial demand commonly referred to as supplier-induced demand or provider-induced demand. Research studies, including McGuire and Pauly in 1991, have pointed to physician’s behavior of creating demand to their own financial benefit. Santerre and Neun in 1996 also document this phenomenon.

There is little debate that the well-known growth in healthcare spending as depicted in the chart below is a problem for our country. In fact, actual growth is faster than forecasted in this chart just a few years ago.

SES is a new company with a U.S. patented programmatic invention to reduce the growth rate of healthcare spending. Founder Michael Samms and his partners have close to 75 years of experience in payer and provider communities. Their experience recognizes the difficulty of change in the industry, especially related to the appropriately sacred physician-patient relationship. The SES innovation respects this relationship, and only introduces a lever to slow growth, without attempting foundational changes in the system. You can learn more by on the About Us page.

Shannon Brownlee documents in her recent book “Overtreated – why too much medicine is making us sicker and poorer” one unique, unhealthy attribute of the American healthcare system. She states "...medicine does not function like other economic markets. If doctors found they weren’t getting enough business, they didn’t have to slash their fees in order to attract new patients; they could simply give more medical care to patients they already had…”

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