A problem with consumer surplus measures of the cost of practice variations.
Estimates of the surplus loss due to physician practice variation measure the area under the 'shifted' demand curve. This method is valid only if the unshifted demand curve is derived form the distribution of true(ex post) values of care. If the unshifted demand curve does not reflect the true value of care, then the traditional methods of measuring surplus loss can be seriously biased.
Dranove
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Kellogg Graduate School of Management, Evanston, IL 60208, USA.
D005251:Fees, Medical; D006301:Health Services Needs and Demand / Q000191:economics* / Q000706:statistics & numerical data; D018803:Models, Economic; D010818:Practice Patterns, Physicians' / Q000191:economics* / Q000706:statistics & numerical data; D014481:United States