CASE STUDY OF SUPPLY INDUCED DEMAND: THE CASE OF PROVISION OF IMAGING SCANS Introduction Health is a natural human desire, although facilitator social mechanisms to pursue it are not available to everyone. Brazilian Federal Constitution, promulgated in 1988, is very clear in recognizing this human disposition when, under the Social Order Heading, declares as follows: Art. 196 - Health is everyone's right and a duty of the State, assured by social and economic policies aiming at reduced disease and other injury risk and by universal and egalitarian access to actions and services for promoting it, protecting it, and restoring it. Brazilian health system organization operates through Sistema Unico de SaUde (SUS) [Single Health System]. This model includes delivering both a public and a supplementary system. The supplementary system is responsible for about 40-million-people care and is regulated by the Agncia Nacional de Sadde Sup/ementar (ANS) [National Supplementary Health Agency], while health care is directly provided by the State to 160 million Brazilians. As the constitutional text makes clear, the Brazilian State should have appropriate and sufficient social and economic policies so that legislators rulings are fulfilled. Public economic policies are understood not only as financial resources allocated to health, but also as a policy for rationally using these resources. The balance between inflow and outflow is one of the touchstones of the competent health management. This study aims at studying a small aspect of health resource use supply induced demand whose observation was inspired by Roemer's pioneering work that, by studying hospital bed availability in a county in New York State in the 50's, detected that increased bed supply created 1full occupancy not warranted by a restrained demand. Supply was stimulating demand . The importance of studying health economics, a description of factors interfering with supply and demand in health care, an exposition about national regulatory guidelines for health care, and presentation of the case addressing imaging services at the Medical Work Cooperative UnimedManaus will be briefly reviewed below in order to contextualize and systematize the study. Economics and health The current economic status of health care system is scarcity of resources and/or their waste, no incentives for the several players involved, incorporation of new health care technology with no defined criteria, and a great variability in using inputs and medical procedures. Thus, it is very important to understand the various factors in this equation called health care. Although necessary, the relationship between health care professionals, economists, and other management professionals has not been too peaceful, citing Del Nero as an example stating in his introductory article on the subject: "Economics has a very tough interaction with health care professions. Many reasons arise from the different ways each one of them considers health care. Traditionally, health care professionals focus on individualistic ethics, according to which health is priceless and any effort is justified to save a life. On the other hand, economics is settled on common good or social ethics. This unnecessary conflict has hindered the interaction of two sectors not working independently. There is no possibility of achieving a good health care without a good medical care - not underestimating the other professionals providing health care - committed to the best care for the patients and an accountable management concerned about following up the care required by the physician as a result from either individual or collective patients' needs. Centrally to the management of this dilemma are financial resources (funding), their application (cost), and results of their use. Upon analyzing those components, several methodologies are employed, all of them aiming to evaluate the relationship between what has been spent and what has been gained. Some of such strategies are: a) cost-effectiveness analysis, the most used in literature, measures the cost in monetary units divided by a non-monetary unit called natural unit, e.g. survival years after a certain health intervention; b) cost-benefit analysis, the cost is divided by the benefit monetary value, which lends methodological complexity, as monetary value is to be assigned to life; c) cost-minimization analysis, comparing the treatment cost alternatives, on the premise the final medical effect is equivalent; its purpose is identifying the least costly way of reaching the desired endpoint; d) cost-utility analysis is a special way to analyze cost-effectiveness, in which the cost per utility unit (unit related to the individual wellbeing) is calculated. The most commonly used unit is termed Quality-Adjusted Life Years (QALY)2. Factors interfering with health service demand and supply In December 1963, Kenneth Arrow published an article4, "Uncertainty and the Welfare Economics of Medical Care", which would become a classic in health economics literature, including a facsimile recent edition by the World Health Organization4. In his study, Arrow lists a group of characteristics that he believes distinguish health care from other economic sectors. These characteristics are: a) the nature of the demand, which is strongly individual, irregular, and uncertain in this sector; b) the physician acting as a health service seller, but with a different behavior from any other business person, as it is expected; c) the uncertain product that, according to Arrow, may be the main characteristic distinguishing the product health care from other commodities; d) conditions of market supply, where a regulated professional market prevents the free access to new service providers, thus elevating the service cost; e) pricing policy with unusual pricing practices and high variability. Several factors were found to affect the quantity of a good or a service people intend to use. These determinants can also be classified in a more simplified way into the following groups: a) considering what has been previously exposed, it becomes clear that the structure of consumer preferences is one of the main determinants of a good or a service demand; b) the perceived quality of a product or service; c) the good or service price; cl) the price of other products or services; e) the consumer available income. Other important aspects also influence health service use. One of them is the psychosocial aspect. Working women, as an example, experience more acute and chronic morbidities than housewives. The fact that Brazilian Law provides unlimited access to health services (in the private system a few residual restrictions remain) has stimulated its use. In the private sector, there is recurrent communication of system's non-rational use with frequent reports of patients undergoing laboratory tests, but never coming to get their results. Technological progress generates both supply and demand. It is a real doubleedged sword. It provides undeniable gains for individuals, but, on the other hand, it is a source of growing cost. The physician is pressed to use it and the patient insists on its use, as he/she is motivated by an aggressive advertisement selling technology as the most important part of health care. Increasing lawsuits against physicians have led many professionals to adopt defensive behaviors, among which is the overuse of diagnostic resources with the justification of "better safe than sorry", thus avoiding, future liability and eventual convictions for neglect or malpractice. In a consumerist world, if there is supply, there will be demand, even though this consumption not always means a real health service need, since health care necessity should be distinguished from health care use. Therefore, the demand concept often clashes directly against the need concept. While the former focuses the consumers' freedom to choose according to their own preference frame, the need concept is an exogenous definition by an expert. Thus, we will be facing a need to consume health care when an individual is ill or disabled and knows there is a treatment or cure for his condition, while health care use is shown when an individual considers he requires and desires to receive a treatment. As one can see, dynamics of health service use is too complex and has numerous variables, being some of them concurrent and others antagonistic, generating a problem to solve equation that requires a lot of effort to be understood, but a better health care will be derived from this understanding. Given these facts, this work aims at nding supply induced demand (Roomer's Law) occurring at imaging (Computed Tomography and Magnetic Resonance) services accredited by UnimedManaus from January 1998 to June 2004. Methods Study outline: This a retrospective study covering the period from January 1998 to June 2004, a time when computed tomography and magnetic resonance services were implemented as facilities supplied by that health care plan. Data base: Data were collected from de health plan data base (SIAMED), organized into a statistical software spreadsheet SPSS (version 15), and underwent statistical analysis. Data processing: Aiming at the study objectives, the data were descriptively organized in the first instance, listing information resulting from types of scans performed sites where they were carried out and the system user population. An adjustment of the number of scans monthly performed to the user population in the corresponding month was made to evaluate appropriately the effect of supply on demand. For that, five indexes were created, namely: Resus The results will be described independently, i.e., the data on computed tomography and magnetic resonance will be shown separately, as the two kinds of scans have different delivery periods. Over the study time period, Unimed-Manaus was a medical work cooperative responsible for delivering medical care to 141,373 users corresponding to about 10% of Manaus population at the time (the population estimated by Instituto Brasileiro de Geograa e Estatl'stica [Brazilian Geographical and Statistical Institute - IBGE] was 1,422,905). A total of physicians ranging from 830 to 1,099 professionals provided health care, with a monthly mean of 947 physician members having asset links to the cooperative, that is, they owned the health plan operator. According to a personal communication from the cooperative Chairpersons at the time of the service implantation, accreditations were motivated by the desire to provide a better service to the health plan users, although there was no evidence of restrained demand. Discussion and conclusions As discussed above, many factors interfere with supply and demand of health services. In this study specific case, clearly the new service supply must be preceded by correct study on the real need of supply enlargement. Otherwise, a system cost elevation could occur, resulting from the supply induced demand alone. This situation will be even more serious if the deliver is associated with advertising campaigns or if the media is drawing attention to the technological progress that might be associated with the new service provided. The aggravating factor is this increased outflow not always means a better health care, which would be better assessed by taking into account the efcacy and the effectiveness of the provided services. In this specific case, the current study could identify a supply induced demand phenomenon (Roemer's Law) occurring from the retrospective review of imaging service data (computed tomography and magnetic resonance) from the Medical Work Cooperative Unimed-Manaus health care plan. This became more evident for magnetic resonance scans, as the services were delivered more definitely in three discrete moments, providing a clearer identification of each clinic contribution to the study phenomenon. Whether in public or private level, the appropriate incorporation of new technology is a great challenge in health resources managing in the present days. Currently, Manaus has 15 computed tomography scanners and four magnetic resonance scanners. This fact, apart from constituting a huge capital, is also, as this study quantitatively demonstrated, an encouragement to consumption, bringing with it potentially enormous expenses that will certainly affect substantially the already limited and sparing health resources. New services might be very important to cover a population health care correctly, but their incorporation with no previous need study causes a potential managing destabilization and instead of providing efficiency gains, they turn into factors creating elevated cost and financial unbalance. Although the presented data originated from supplementary health care system in Brazil, we should consider this fact as possibly occurring in public management where cost control is knowingly lower than in the private initiative. ****End of Case Study****