Question

1- explain the concept of supplier-induced demand in medical markets?

2- explain methods that can be used to reduce it in healthcare.

Answer 1

Answer)

1. Supplier induced demand means the unnecessary demand created by supplier owing to asymmetrical or incomplete information,when we talk about medical markets,we have to know that lot of patients depend on their doctors for advice,now doctors may advice them a particular medicine owing to their own cost benefits(a new medicine so discount for orders or company running promotional programs),now patient is not aware and is not having complete information for them a medicine recommended by doctors is fine,for doctors they are okay if its same chemiclas while for medical representatives it is a way to increase demand which we know as supplier induced demand.
2. Following are the methods in which it can be reduced in healthcare

• A board which can keep a check on such practises.
• Knowledge portal for patients can help reduce this incomplete and imperfect information which is the main cause of such induced demands.
• Quota being setup for a particular medicine being recommended or continuos checks beyond a pre defined quota can help the cause.
• Focus on keeping in check the marketing promotions being done to induce such demands.

Answer is complete.Thank you!