Everybody describe some health

        A principal is an organization or individual thatis represented by an agent. An agent is then a person who takesactions on behalf of another person, which would be the principal.Normally the agent has better, and more information collected, andunless the principal is careful then the agent may take advantageof this information asymmetry. Asymmetric information is a concernwhen the interests of the parties diverge in a meaningful way, theparties have an important reason to strike a deal, and determiningwhether the explicit or implicit terms of the deal have beenfollowed is difficult. An example of a healthcare situation wherean agent has taken advantage of a principal would be when an agentoverrules the principal and decide what they feel is correct beforeconfronting it to the principal. A healthcare transaction that hasnot taken place due to fears about asymmetric information could bea moral hazard. Situations such as when an insurer may refuse tocover services thought likely to be abused since they cannot easilydiscern whether a treatment is really needed. They may then requiresubstantial consumer payments to restrain demand or priorauthorization before providing coverage. This affects the use ofhelpful services because the services may cost too much. Asymmetricinformation is also intrinsic to most provider-patientrelationships. Patients typically seek providers’ services becausethey want information, so the threat of opportunism is alwayspresent.

           Until recently, economic analyses of clinical interventions wereuncommon. There was little to no incentives for healthcareadministrators to measure whether procedures were worth theircosts. As the emergence of bundled payment systems and the growthof capitation occurred, then these analyses became more prominent.The system of bundled payments is also called episode payment, andthe development of capitation payments are used by managed careorganizations to control health care costs. Capitation paymentscontrol the use of health care resources by putting the physicianat financial risk for services provided to patients. These arelinked to financial rewards or incentives to provide the best carein the best way possible. Economic analyses of clinicalinterventions are needed because public and private insurers needinformation on which to base coverage decisions. These analyses aredesigned to support decision making, not to make decisions. Theyprovide a framework for synthesizing and understanding information.The importance of being able to compare the right options is whatthese analyses allow organizations, providers, to do.

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