Optimal Health Care Contracts under Physician Agency

Philippe Choné and Ching-to Ma

No WP2007-041, Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics

Abstract: We examine contracts between insurers and physicians when the treatment is chosen to maximize a combination of physician profit and patient benefit (“physician agency”). The degree of substitution between doctor profit and patient benefit in the physician-patient coalition is the physician’s private information, as is the patient’s intrinsic valuation of treatment quantity. The equilibrium mechanism only depends on the physician-patient coalition parameter. Moreover, the equilibrium mechanism exhibits extensive pooling, with prescribed quantity and physician reimbursement being insensitive to the agency characteristics or patient’s actual benefit. The optimal mechanism is interpreted as managed care where strict approval protocols are placed on treatments.

Keywords: physician agency; optimal payment; health care quantity; managed care; minimum profit; asymmetric information (search for similar items in EconPapers)
JEL-codes: D82 I1 I10 L15 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2007-01, Revised 2007-09
New Economics Papers: this item is included in nep-cta and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Optimal Health Care Contract under Physician Agency (2011)
Working Paper: Optimal Health Care Contract under Physician Agency (2010)
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: https://EconPapers.repec.org/RePEc:bos:wpaper:wp2007-041

Access Statistics for this paper

More papers in Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Program Coordinator ().