Agency Relationship

Definition

Health Economics

  • The relationship between an agent and a principal. Classically in health care, the role of a physician or other health professional in determining the patient's (or other client's) best interest and acting in a fashion consistent with it. The patient or client is the principal and the professional is the agent. More generally, the agent is anyone acting on behalf of a principal, usually because of asymmetry of information. In health care, the situation can become rather complicated by virtue of the facts, first, that the professional thereby has an important role in determining the demand for a service as well as its supply and, second, that doctors are expected (in many systems) to act not only for the 'patient' but also for 'society' in the form, say, of other patients or of an organization with wider societal responsibilities (like a managed health care organization), or taxpayers, or all potential patients.
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