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"Drug Subsidized Medicine" Phenomenon: Research Based on Principal-Agent Theory

Author: JiangShan
Tutor: ZhuQiGui
School: Shanghai Jiaotong University
Course: Western Economics
Keywords: “Drug Subsidized Medicine” principal-agent theory hospital compensating system
CLC: F426.72
Type: Master's thesis
Year: 2011
Downloads: 205
Quote: 1
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Abstract


The expensive health cost and its rapid growth rate are prominent social issue these years. An important cause for this phenomenon is the“Drug Subsidized Medicine”(DSM) policy. In this paper, principal-agent theory is applied as the basis of the analysis on DSM, including its formation, role and consequences. The theoretical understanding will be enhanced as the result of this paper. Besides, this paper will benefit the government to formulate more effective medical policies.DSM is related with government, health insurance, public hospitals, pharmaceutical companies and patients. In this paper, Linear Stimulation Model and Multi-sectoral Supervisory Model are established to analyze the principal-agent relationship between the government and public hospitals. Over Prescription Model is established to analyze the relationship between hospitals and patients. Moreover, this paper also discusses the principal-agent relationship between other players. These models and analysis disclose key parameters in DSM. Additionally, health policies are analyzed to obtain beneficial suggestions. In the end, systematic policy recommendations are provided in this paper.

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CLC: > Economic > Industrial economy > China Industrial Economy > Industrial sector economy
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