Supplier-induced demand has been used by non-economists to characterize a wide range of sins related to the provision of health care services. Economists have adopted a more narrow definition: a principal-agent problem in which physicians face a trade-off between patient benefits and their own income. We expand this model of physician behavior to one that allows for organizational factors (such as peer pressure or willingness to accommodate referring physicians), and professional beliefs about the efficacy of specific treatments. We test the model using two unique national surveys from 2005; one of 516 U.S. cardiologists and the other a survey of 2,515 Medicare enrollees asked about preferences for end-of-life care. Our results do not support a large role for patient demand or direct financial considerations in explaining regional differences in utilization. While organizational factors influence physician behavior, the best explanation for large observed variations in treatment patterns is physician beliefs about their own productivity. That many cardiologists’ beliefs are more aggressive than professional guidelines suggest indicates considerable waste in U.S. health care.