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Previous works that uses patterns of prior spending to predict future mental health care expenses (utilization models) are mainly concerned with demand (need) variables. In this paper, we introduce supply variables, both individual rater variables and center variables. The aim is to assess these variables’ explanatory power, and to investigate whether not accounting for such variables could create biased estimates for the effects of need variables.
We employed an observational study design where the same set of referrals was assessed by a sample of clinicians, thus creating data with a panel structure being particularly relevant for analyzing supply factors. The referrals were obtained from Norwegian Community Mental Health Centers (outpatient services), and the clinicians assessed the referrals with respect to recommended treatment costs and health status.
Supply variables accounted for more than 10% of the total variation and about one third of the explained variation. Two groups of supply variables, individual rater variables and center variables (institutions) were equally important.
Our results confirm that supply factors are important but ignoring such variables, when analyzing demand variables, do not generally seem to produce biased (confounded) coefficients.