Economics at your fingertips  

Physician agency

Thomas G. McGuire

Chapter 09 in Handbook of Health Economics, 2000, vol. 1, pp 461-536 from Elsevier

Abstract: This chapter reviews the theory and empirical literature on physician market power, behavior, and motives, referred to collectively as the issue of "physician agency." The chapter is organized around an increasingly complex view of the demand conditions facing a physician, beginning with the most simple conception associated with demand and supply, and building through monopolistic competition models with complete information, and finally models with asymmetric information. Institutional features such as insurance, price regulation, managed care networks and noncontractible elements of quality of care are incorporated in turn. The review reveals three mechanisms physicians may use to influence quantity of care provided to patients: quantity setting of a nonretradable service, influencing demand by setting the level of a noncontractible input ("quality"), and, in an asymmetric-information context, taking an action to influence patient preferences. The third mechanism is known as "physician-induced demand." The empirical literature on this topic is reviewed. Theories based on alternatives to profit-maximization as objectives of physicians are also reviewed, including ethics and concern for patients, and the "target-income" hypothesis. The target-income hypothesis can be rejected, although there is empirical support for non-profit maximizing behavior.

JEL-codes: I1 (search for similar items in EconPapers)
Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (167) Track citations by RSS feed

Downloads: (external link) ... 08ca84deff87aadc839c
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this chapter

More chapters in Handbook of Health Economics from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-07-03
Handle: RePEc:eee:heachp:1-09