What are some of the reasons for increased healthcare costs attributable to the providers of medical care?
• Providers in many instances set their own charges, which are higher than what the same charges would be under free-market conditions.
• Providers are in a position to induce demand for services, leading to higher utilization than what is necessary. Many of the procedures performed are medically unnecessary.
• Providers have done little to promote healthy lifestyles and the prevention of disease because they have mainly espoused the medical model for healthcare delivery.
• Because of legal risks, providers have engaged in the practice of defensive medicine to protect themselves against potential malpractice lawsuits.
• Small area variations suggest that physicians can vary widely in their medical decision making and use of healthcare resources. Scarce medical resources are wasted when they are inappropriately used.