Optimal Health Care Contract under Physician Agency
AbstractWe model asymmetric information arising from physician agency and its effect on the design of payment and health care quantity. The physician aims to maximize a combination of physician profit and patient benefit. The degree of substitution between profit and patient benefit in the physician agency is the physician's private information, as is the patient's intrinsic valuation of treatment quantity. The equilibrium mechanism depends only on the physician agency parameter, and exhibits extensive pooling, with prescribed quantity and payment being insensitive to the agency characteristic or patient's actual benefit. The optimal mechanism is interpreted as managed care where strict approval protocols are placed on treatments.
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Bibliographic InfoArticle provided by ENSAE in its journal Annals of Economics and Statistics.
Volume (Year): (2011)
Issue (Month): 101-102 ()
Other versions of this item:
- Philippe Chone & Ching-to Albert Ma, 2007. "Optimal Health Care Contracts under Physician Agency," Boston University - Department of Economics - Working Papers Series WP2007-041, Boston University - Department of Economics, revised Sep 2007.
- Ching-to Albert MA & Philippe CHONÉ, 2010. "Optimal Health Care Contract under Physician Agency," Boston University - Department of Economics - Working Papers Series WP2010-022, Boston University - Department of Economics.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- I1 - Health, Education, and Welfare - - Health
- I10 - Health, Education, and Welfare - - Health - - - General
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
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