Question

Describe the concept of principal-agent relationship and how it applies to physician and patient interaction

Answer 1

The concept of principal-agent relationship states that there exists a relationship between every healthcare provider and their authority and patient. It states that the healthcare provider is the one holding the authority and the patient will do everything to maximise their profit at the cost of authority and principal.

A patient has a health issue and he/she meets a physician. The physician started treatment but the patient has no idea if he/she is being treated correctly by the physician since they don't have expertise in this area. In this type of healthcare setting, a principal-agent relationship between a physician(agent) and patient(principal) exists.