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Medicine doesn't really follow supply and demand. If you install more CT or MRI scanners, you do more scanning. Demand follows supply. This is not helped by it only rarely being the patient who pays directly (usually insurance or taxpayer). People tend to do what their doctors suggest and go where their doctors say to go. There was a great article on this I read about a year ago. I thought it was in the Economist, but can't find it. Wikipedia is the best I can find sorry. http://en.m.wikipedia.org/wiki/Supplier-induced_demand

[horacio]

I believe the article you're referring to is Steven Brill's 26,000 word opus "Bitter Pill - Why Medical Bills Are Killing Us", which appeared in the U.S. edition of Time Magazine in March of this year.

In it, he makes a specific criticism that not only do hospitals that purchase diagnostic scanners tend to make greater use of it, but that quite often, an above-average count of referrals to diagnostic imaging centers (which are places which only do MRI and CT scan work) are one of the leading indicators of out-of-whack pricing for a given hospital.

Patients still reflexively follow their doctors orders. So if their doctor says an MRI or two is required before he proceeds with treatment, the patient will happily get the MRI done.

Changing the ingrained behavior of patients in this regard is a must if we expect to be able to control this particular aspect of medical cost increases.

sbercus10 has done this thread a huge favor in his comment (https://news.ycombinator.com/item?id=6015542) where he provides the following link to a PDF of Brill's Time article:

http://livingwithmcl.com/BitterPill.pdf

[sseveran]

Not only that but my observation after working for 10 years in radiology is that many other departments either outsource diagnosis to radiology or at least want a study done. That way in case there is a lawsuit the finger can be pointed somewhere else. While this effect is hard to quantify it is definitely encouraged by hospital executives since radiology can be a highly profitable department.

[lostlogin]

I work in radiology too - interesting that we have come to the same conclusions for different reasons. You can't sue here (at least not easily) as there is a system of compensation for blunders etc and yet supply really doesn't follow demand and pricing is arbitrary.