Patients, doctors and contracts: an application of principal-agent theory to the doctor-patient relationship

The doctor-patient relationship has been the main focus of principal-agent theory in health care. This paper focuses on communication between doctors and patients within the doctor-patient relationship as a method by which the utility of the principal (patient) can be maximised. Patients' preferences for various attributes of the doctor-patient relationship are examined using a discrete choice experiment. Individuals were presented with pairs of hypothetical scenarios describing GP visits that differed depending on the attributes of the doctor-patient relationship. In the time-constrained GP consultation, the results show that being able to talk to the doctor is the most important attribute, followed by patients' understanding of the doctor's explanations, waiting time for an appointment, and the amount of information transferred to the patient. Quality of information is more important than its quantity. The extent to which patients were involved in decision making had no influence on the choice of visit, although it was important to patients who were relatively young and female. Policies aimed at involving patients in decision making should be targeted at specific groups of patients only. The results have implications for the training of doctors in communication skills as a response to market failure caused by asymmetry of information.