Demand for Medical Care

(1) Demand for Medical Care
(2) Provider Choice
Lesson Objectives:
(1) To understand the role of price and non-price factors affecting individuals’
demand for medical care.
(2) To interpret estimated price elasticities of demand for medical services and to
understand why they vary by service type.
(3) To differentiate between an overall price elasticity of demand versus a firmspecific price elasticity for a medical good or service.
(4) To understand the relationship between price-sensitivity and revenue generation
by a health care organization.
(5) To understand the role of income and other factors on the demand for medical
(6) To identify and describe the set of factors that affect how individuals select
hospitals and physicians, including the role of information.
FGS 9, 10
Abraham, J., R. Feldman, C. Carlin, J. Christianson. “The effect of quality information on
consumer health plan switching: Evidence from the Buyers Health Care Action Group.”
Journal of Health Economics, 2006, 25(4): 762-781.
Tu, H. and J. Lauer. “Word of Mouth and Physician Referrals Still Drive Health Care
Provider Choice.” Center for Studying Health System Change. December 2008.
Accessed at:
*Avery, R., M. Eisenberg, K. Simon. “The impact of direct-to-consumer television and
magazine advertising on antidepressant use.” Journal of Health Economics, 2012, 31:
Supplemental Resources:
Kaiser Poll on Trends in the Use of Hospital and Provider Quality Ratings. Accessed at:
Abraham, J., B. Sick, J. Anderson, A. Berg, C. Dehmer, and A. Tufano. “Selecting a
provider: what factors influence patients’ decision-making?” Journal of Healthcare
Management, 2011, 56(2): 99-114.
Harris, K. and M. Buntin, “Choosing a health care provider: The role of quality
information.” Robert Wood Johnson Foundation Synthesis. Accessed at:
Christianson, J. et al. “A Report Card on Provider Report Cards: Current Status of the
Healthcare Transparency Movement.” JGIM, 25(11): 1235-1241. Accessed at:

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