An analysis of the evidence on competition in the physician services markets.

By comparing aggregated physician utilization data in Michigan with a disaggregated measure of the intensity with which physicians treat their patients, the article shows that the availability effect found in many studies of the physician services markets is due to the larger number of providers seen by patients in physician dense markets. Although the aggregated data are consistent with the concept of induced demand, the data from individual practices do not indicate that doctors treat their patients more intensively as the availability of physicians increases. The paper discusses and interprets these results within the context of current issues in health care policy.