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Principal-Agent Theory
Home›Principal-Agent Theory›Patients, providers and a bus full of drivers in the back

Patients, providers and a bus full of drivers in the back

By Terrie Graves
July 11, 2021
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When I was young, I visited my grandparents in Florida. In their garage they had an old white Toyota Corolla. Despite the advanced age of the vehicle, it has remained in immaculate condition. After all, he only had 300 miles. Not 300,000 miles – no comma required – just the equivalent of a full trip from Jacksonville to Miami on the odometer. My grandparents booked the car specifically to visit family to ‘drive’. These quotes are important.

When I was old enough to drive, my grandmother – now 80 years old and strapped in the back, with a few cataracts to her name – offered a generous contribution and colorful commentary on my driving. She made a point of emphasizing that I should not follow the car in front of me too closely. Still, I also shouldn’t let the car behind me follow me too closely. I was told, unequivocally, that I have to both speed up and slow down, at the same time, always.

This conundrum came up again on a particularly memorable trip on I-95. I was stuck between slowing down to give more distance to the car in front of me and accelerating to lengthen the distance from the car behind me. What if I had chosen to do neither, or just one of these choices? I would have chosen more precisely the anger of my grandmother. If you knew her, you would know I didn’t want this anger. You neither.

So even though I was behind the wheel, I certainly didn’t want to. This colorful anecdote draws an important parallel to the way we live, deliver and interact with the healthcare system. For many patients who pilot their own fitness trail, that lack of control mixed with confusing advice must have oddly resembled rough driving with frantic passengers taking the lead.

Who runs health care?

Driving change in the health sector is a challenge precisely because no one seems to agree on who is leading who, or when, or where. In theory, the ecosystem is designed to benefit the patient first. When we think of patient-centered care, we like to imagine them in control of their own health.

However, our current model of caregiving works more like a bus where everyone gives directions, tells the patient how to drive, and where to stop or get off, often with conflicting comments. Some claim the fastest route, some avoid (or encourage) tolls, some tell patients to only take the roads they know… speed up, slow down, turn here, go straight, drive on the shoulder and dodge all this traffic.

The question of who drives health care is not easy to answer, nor always in the way that best serves the person behind the wheel. Drivers in the back cannot get along, take turns directing and dictating directions (largely in the service of satisfying their own interests) and end up leaving patients unable to drive with varying degrees of confidence. or sufficient know-how. This is a classic illustration of the principal-agent problem, which, although it does not originate and is not exclusive to health care, this problem is particularly pronounced.

Examples of principal-agent problem (s)

When priorities differ between one person or entity that may make decisions or take actions (the “agent”) on behalf of (or that have an impact) on another (the “principal”), it creates moral hazard. . In the provision of care, since the patient is clearly the primary one, this can also create a potential health hazard. The scope of the principal-agent problem is as wide and serious as the size of the system and the variety of agents.

A wide range of people and entities, accountable to various interests, incentives and obligations, regularly make decisions on behalf of patients. These agents fall mainly into three main categories: payers, providers and caregivers.

Payers cover the costs of patient care, but every dollar given means less money for shareholders. To the extent that they see fit and to the extent that they are permitted within legal and compliance limits, payers can maximize their profits by denying payment for patient care.

Suppliers work to make the patient healthier, but must also comply with regulatory, legal and ethical mandates, and operate within budgetary and administrative restrictions. They must also take action to ensure that they can continue to earn a living to support themselves, their families and their care delivery infrastructure (i.e. personnel, technology, licensing, overheads).

Caregivers also want to improve the health of the patient, but also to have a significant emotional investment in the patient’s journey. The outcome desired by a caregiver or the means to achieve it may be very different from that of the patient. For example, if antibiotics reduce the length of time a child has an ear infection by 24 hours, but increase the risk of diarrhea and other unpleasant side effects, the caregiver’s choice the child may vary depending on the severity of the infection, who needs to change diapers, and who needs to wake up at night with the crying child.

Solutions (and directions) for getting on the road

A Analysis 2011 Examination of prescribing models from private providers in Vietnam suggests that empowering patients with greater education can help reduce the principal-agent problem in healthcare. The more a patient knows about their health and how health care works, the more confident they can be while standing up for their own name, and the more likely they are to appropriately assess any treatment or prevention options. or postpone unnecessary treatments.

The analysis also proposes to improve regulatory oversight and public-private collaboration to better align provider and payor incentives with patients’ interests, echoing research to Tennessee State University published a decade earlier.

The incentive, of course, remains the not-so-invisible hand on the wheel. To further balance the contribution scales between patients and agents, a presentation 2012 at 4th International Scientific Conference proposes a system of remuneration designed to “contribute the most to the motivation of the doctor to maximize the utility of the patient”.

This utility-based reward system must, by its nature, encourage optimal consumption of resources. Optimal strikes a balance between our two current systemic evils of ruthless efficiency and superfluous excess. Care can focus more directly on the interests of patients as the system readjusts its incentives – financial, regulatory, professional, emotional – to align more closely with patient outcomes.

Empower patients to get behind the wheel

Advancing health is, as often and as skillfully as possible, helping patients drive instead of “driving”. It requires centering the patient and protecting the sacred trust in the patient-provider relationship. A principal-agent problem, even if not directly caused by the vendors themselves, erodes that trust. Payers, caregivers, providers, and the entire healthcare ecosystem all play a role in aligning with what’s best for the patient and above all valuing their trust.

The easiest way to get a patient to take the wheel of their health journey is to remind them at every turn that they are the driver and to provide them with the system of education, trust, transparency and support. to keep your eyes on the road and their desired destination close at hand. The less back-driving, the more likely patients are to listen to vital information or figure things out on their own.

Or they’ll end up like me, on I-95 in Florida, with my grandmother sitting in the back of the Corolla. That day, torn between speeding up and slowing down but supposed to do both at the same time, I thought I had found a very clever solution: I pointed my finger at the rearview mirror, then pointed out to him that the car behind us did not was not that close.

But my grandmother wasn’t about to be so easily deceived, as the rearview mirror clearly said, “The objects in the mirror are closer than they appear.”

“Oy,” she said, “it’s even worst that I thought. You better change lanes.

Of course. Now why didn’t he I think about that? After all, I was the one driving.

Photo: Boogich, Getty Images

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