Spring 2006 Seminar Series

DATE:Thursday, April 6, 2006
LOCATION: E40-496
TIME: 4:15pm
Reception immediately following in the Philip M. Morse Reading Room, E40-106

SPEAKER:
Erol Peköz

Associate Professor of Operations and Technology Management

Boston University

TITLE
Distinguishing Induced Demand from Redirected Demand in a Healthcare Network

ABSTRACT
Do more hospital beds in an area induce excess demand? A commonly accepted theory in health care is that demand will rise to fill available supply, and thus there is debate on whether regulating supply could be an effective method for controlling costs. This theory, however, is traditionally justified by misleading methods.  We show how the complex network structure of the healthcare system can make traditional methods for measuring links between supply and demand very misleading, since induced demand is not properly distinguished from diverted demand.  We give a better approach using a Bayesian hierarchical model of network traffic, and apply it to treatment records from all Medicare recipients in Massachusetts over one year.