The health-care economy is filled with unusual and even unique economic relationships. One of the least understood involves the peculiar roles of producer or "provider" and purchaser or "consumer" in the typical doctor-patient relationship. In most sectors of the economy, it is the seller who attempts to attract a potential buyer with various inducements of price, quality, and utility, and it is the buyer who makes the decision. Such condition, however, does not prevail in most of the health-care industry. In the health-care industry, the doctor-patient relationship is the mirror image of the ordinary relationship between producer and consumer. Once an individual has chosen to see a physician—and even then there may be no real choice—it is the physician who usually makes all significant purchasing decisions: whether the patient should return "next Wednesday", whether X-rays are needed, whether drugs should be prescribed, etc. It is a rare and sophisticated patient who will challenge such professional decisions or raise in advance questions about price, especially when the disease is regarded as serious. This is particularly significant in relation to hospital care. The physician must certify the need for hospitalization, determine what procedures will be performed, and announce when the patient may be discharged. The patient may be consulted about some of these decisions, but in the main it is the doctor's judgments that are final. Little wonder then that in the eye of the hospital it is the physician who is the real "consumer." As a consequence, the medical staff represents the "power center" in hospital policy and decision-making, not the administration. Although usually there are in this situation four identifiable participants—the physician, the hospital, the patient, and the payer(generally an insurance carrier or government)—the physician makes the essential decisions for all of them. The hospital becomes an extension of the physician; the payer generally meets most of the bills generated by the physician/hospital, and for the most part the patient plays a passive role. We estimate that about 75-80 percent of health-care expenditures are determined by physicians, not patients. For this reason, the economy directed at patients or the general is relatively ineffective.
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