An Economic Model of the Salaried Physician in a Public Health Care System

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: At present there is no health economic model that can fully explain the behaviour of the salaried physician in public health care systems. My purpose is to create a working economic model of the salaried physician in a public health care system. Any model is a simplification of reality and choices have to be made between simplicity and relevance. For this reason I present a sequence of models that gradually evolve from simpler models towards more realistic ones. More precise, I develop three models. The first model is a neoclassical model, which considers the salaried physician as a double agent for both the patient and the hospital manager. The second model is a multidisciplinary model, which in addition integrates insights from social psychology and sociology. The third model is a bounded rationality model, which also allows for cognitive limitations and unstable preferences. At this point, it is my conclusion that the multidisciplinary model is best suited for modelling the salaried physician in a public health care system. At the same time I am of the opinion that the challenge for the future is to further develop the bounded rationality model.

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