Objective: to explain the supplier induced demand theory paradigm, track the empirical research progress, using the model for health care reform in China. Methods: launched new classical theory, game theory and behaviorism school theoretical derivation of induced demand, using the classical empirical research and the latest research progress, systemic review on supplier induced demand. Results: the generation of supplier induced demand is related with incentive system, the type of disease and the crowd of research. Conclusion: it can effectively reduce the induced demand for health care that constraining hospital internal incentive, reforming medical supply side structural, developing the Internet + medical, building DRGs payment system.