Supplier-induced demand is the idea that physicians face trade-offs between patient benefits and their own income, and that equilibrium behavior partly reflect financial benefit. We embed supplier-induced demand in a model where there is variation in patient preferences and where physician behavior is affected by both organizational factors and professional beliefs. We test the model using two surveys. The first is of U.S. cardiologists asked questions about organizational and financial pressures, and given vignettes on how they would treat specific patients. The second is of elderly Medicare enrollees who were asked about preferences for end-of-life care. Both surveys were linked to Medicare end-of-life utilization data at the hospital-referral region (HRR) geographical level. Our results do not support a large role for patient demand or direct physician 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. Many cardiologists’ beliefs are more aggressive than professional guidelines, suggesting the presence of considerable waste in U.S. health care.