Good question. I think in healthcare, supply generally drives demand, rather than the other way around. It does not meet the criteria for a typical economic exchange where individuals pay based on their concept of ‘value’ and the necessary information (or transparency) is available to make informed decisions. Have you been on the Dartmouth Atlas website (www.dartmouthatlas.org)?–great information on this subject.

Good initial start with your analysis of the problem. I’m curious, however, as to what the data show as to the number of physicians by region. Adam Smith would have theorized that the region with the most doctors per capita would produce lower costs as the invisible hand of supply and demand worked its magic to reduce the price of healthcare. My guess would be that Miami has more doctors per capita than Honolulu. So, why doesn’t supply and demand work in healthcare?