Agency problems of global budget system in Taiwan's National Health Insurance

• Published in: Health policy (Amsterdam) 2014-05, Vol.116 (1), p.37-50
• Main Authors: Yan, Yu-Hua, Yang, Chen-Wei, Fang, Shih-Chieh
• Format: Article
• Language: English
• Subjects: Agency; Agency theory; Appropriations and expenditures; Auditing; Biological and medical sciences; Budgets; Budgets - organization & administration; Cost; Economics, Hospital - organization & administration; Ethics; Ethics, Medical; Global budget system; Governance; Government Agencies - organization & administration; Government and politics; Hazards; Health administration; Health care; Health insurance; Health policy; Health services; Hedging; Hospital Administration; Hospital Costs - organization & administration; Hospitals; Humans; Internal Medicine; Medical care; Medical sciences; Medical service; Medical services; Miscellaneous; National Health Insurance; National Health Programs - economics; National Health Programs - organization & administration; Professionalism; Profits; Public health. Hygiene; Public health. Hygiene-occupational medicine; Risk; Risk management; Taiwan
• ISSN: 0168-8510; 1872-6054
• DOI: 10.1016/j.healthpol.2014.02.005

Abstract The main purpose of this study was to investigate the agency problem presented by the global budget system followed by hospitals in Taiwan. In this study, we examine empirically the interaction between the principal: Bureau of National Health Insurance (BNHI) and agency: medical service providers (hospitals); we also describe actual medical service provider and hospital governance conditions from a agency theory perspective. This study identified a positive correlation between aversion to agency hazard (self-interest behavior, asymmetric information, and risk hedging) and agency problem risks (disregard of medical ethics, pursuit of extra-contract profit, disregard of professionalism, and cost orientation). Agency costs refer to BNHI auditing and monitoring expenditures used to prevent hospitals from deviating from NHI policy goals. This study also found agency costs negatively moderate the relationship between agency hazards and agency problems The main contribution of this study is its use of agency theory to clarify agency problems and several potential factors caused by the NHI system. This study also contributes to the field of health policy study by clarifying the nature and importance of agency problems in the health care sector.