This article develops a derived demand for physicians that is general enough to encompass physician control, simple profit maximization and hospital utility maximization models of the hospital. The analysis focuses on three special aspects of physician affiliations: the price of adding a physician to the staff is unobserved; the physician holds appointments at multiple hospitals, and physicians are not homogeneous. Using 1983 American Hospital Association data, a system of specialty-specific demand equations is estimated. The results are consistent with the model and suggest that physicians should be concerned about reduced access to hospitals, particularly as the stock of hospitals declines.
