The Health Services Industry: Realism in Social Control

Ginzberg, Eli
June 1974
Journal of Economic Issues (Association for Evolutionary Economi;Jun74, Vol. 8 Issue 2, p381
Academic Journal
The appeal of competitive economic theory is that it permits economizing in reconciling private interests and public benefits. As long as access into an industry is uninhibited, as long as no producer controls enough of the supply to influence the price, as long as purchasers have adequate knowledge about the market, each buyer and each seller contributes to effecting an optimal social result. Other than the interdiction of fraud and other nonacceptable forms of market behavior, governmental intervention through law or regulation is not required, and the public's interest is best served by permitting buyers and sellers to bargain until they are able to agree on a price. Let us consider the question of how well the health services industry in the United States can be fitted into the model of the competitive market. Many of the health services that consumers buy are not a matter of individual choice, but are sought on the advice of personal physicians. The physician decides whether a patient will enter a hospital, what hospital he will enter, what regimen he will follow, whether he will be operated on, and what pills he will take and how many times a day. Put simply, most consumer demand for health services is derived demand, that is, a demand determined by the patient's physician. Moreover, and to complicate matters, the average consumer is hard put to make a critical judgment about the professional competence of the physician he selects.


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