Policy Essay

In: Business and Management

Submitted By swtnpetite03
Words 2825
Pages 12
Chapter 4
In Whose Interest Does the Physician Act?
1. Why do physicians play such a crucial role in the delivery of medical services?
Although only 25 percent of personal medical expenditures are for physician services, the physician controls the use of a much larger portion of medical resources. In addition to their own services, physicians determine admission to the hospital, the length of stay once in the hospital, the use of ancillary services and prescription drugs, referrals to specialists, and even the necessity for services in nonhospital settings, such as home care.
The role of the physician has been shaped by two important characteristics of the medical system. The first is the legal system: only physicians are permitted to provide certain services. Second, both patients and insurers lack the necessary information to make many medical-related decisions. Patients depend on the physician for diagnosis and recommended treatment and have limited information on the qualifications of the physician or the specialists to whom they are referred. The patient’s lack of information places the physician in a unique relationship to the patient. The physician becomes the patient’s agent.
2. How might a decrease in physician incomes, possibly as a result of an increase in the number of physicians, affect the physician’s role as the patient’s agent?
In addition to being the patient’s agent, physicians are suppliers of a service, and their incomes depend on how much of that service they supply. Many physicians are believed to behave differently when their own incomes are adversely affected. As a “perfect agent” for the patient, the physician would consider only the patient’s medical and economic interests when prescribing a treatment. However, according to the supplier-induced demand theory, an increase in the supply of physicians will cause…...

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