Agency in health care: getting beyond first principles

Area of Science:

• Health economics
• Medical ethics
• Behavioral economics

Background:

• The application of agency theory to healthcare is complex.
• Existing agency theory models do not fully address the nuances of the doctor-patient relationship.
• Understanding the motivations and preferences of both doctors and patients is crucial.

Purpose of the Study:

• To critically evaluate the applicability of agency theory to the doctor-patient dynamic.
• To identify gaps in current agency theory when applied to healthcare settings.
• To advocate for further research into the utility functions of patients and physicians.

Main Methods:

• Theoretical analysis of agency theory principles.
• Examination of the doctor-patient relationship through an economic lens.
• Literature review on existing models and their limitations.

Main Results:

• Basic agency theory provides insufficient answers for the doctor-patient relationship.
• Significant gaps exist in understanding the distinct utility functions of doctors and patients.
• Current models do not adequately capture the complexities of patient preferences in medical decision-making.

Conclusions:

• The theory of agency requires significant adaptation for effective application in healthcare.
• Further empirical research is essential to define patient and doctor utility functions.
• Developing optimal incentive structures necessitates a deeper understanding of these functions to align physician behavior with patient preferences.