Provider payment incentives - Agency theory & models of physician behaviour

3 important questions on Provider payment incentives - Agency theory & models of physician behaviour

What is the evidence for the Target Income hypothesis?

Doctors with I < TI acted differently than doctors with I > TI

What are the conclusions about the physicians utility theory? (3x)

  1. Physicians do not always act as perfect agents for their patients, but sometimes pursue their own interests.
  2. The good news: altruistic/ethical considerations do play a role
  3. Yet it’s clear that physicians’ interests will often not be fully aligned with those of payers à agency problems.

How can we deal with agency problems?

  1. Reducing information asymmetry
  2. aligning interests
    1. payment incentives can help

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