| Description |
I construct a model for interactions between patients and physicians and use the model to explore which conditions are necessary for the patient to receive a certain quality of care. The model allows the patient, upon observing an illness, to choose between treatment or no treatment options while the physician signals some information about the patient's condition. Nature determines the severity of the patient's illness, attainable health outcomes, and the physician's profit motives. Information asymmetry between the patient and the physician occurs in two dimensions-the patient knows less about their illness than the physician and the patient is uncertain of the physician's profit motives. This leads to less optimal outcomes for both players under certain conditions: when the probability an illness is severe is very low, when the patient's choices of treatment have similar efficacies, or when the difference in cost between treatments is close to the health benefit. Compared to previous models that overwhelming assume the physician is altruistic, by allowing uncertainty in this model the highest attainable health outcomes are lower. Compared to previous models that assume the physician is greedy, in this model the patient is not only uncertain that the greedy physician recommends an unnecessarily costly treatment but also that the greedy physician recommends a cheaper, less effective treatment. I conclude that there are ways to improve efficiency within health care markets by targeting prices and information uncertainty within the physician-patient relationship. With ongoing health care reforms, the model allows us to see how the rising costs of medical care and the availability of information in the digital age will affect the future of the physician-patient relationship and consequently health outcomes and the quality of patient care. |
