In recent decades, unnecessary growth in health expenditures of developing countries, and the importance of physicians' behavior in health market, have made investigating determinants of health expenditure on the one hand and the theory of physician induced demand (PID) on the other, as two of the most important issues in health economics. Therefore, using data collected through filling out information collection forms by psychiatrists and patients of East Azarbayjan in 2016 and employing hierarchical linear modeling methods (HLM), this study, examines the determinants of the average expenditure of each visit to a doctor and investigates the theory of PID within psychiatrists in the East Azarbayjan province. The results show that in psychiatry, although psychiatrists are “doctors tend to profit”, there is no physician induced demand. Results also indicate that patiant’s income, patiant’s education level, and condition of illness have significant effects on the average expenditure of each visit to a doctor. According to these results, it is suggested that in order to reduce unnecessary health expenditure, patient information on medical care should be increased, and government monitoring and control over the national health system must be increased.
