Agency problems in hospitals participating in self-management project under global budget system in Taiwan

Objective: The main purposes of this study are to clarify the agency problems in the hospitals participating in self-management project within the context of Global Budgeting Payment System regulated by Taiwan government, and also to provide some suggestions for hospital administrator and health policy maker in reducing the waste of healthcare resources resulting from agency problems. Method: For the purposes above, this study examines the relationships between two agency problems (ex ante moral hazard and ex post moral hazard) aroused among the hospitals and Bureau of National Health Insurance in Taiwan's health care sector. This study empirically tested the theoretical model at organization level. Results: The findings suggest that the hospital's ex ante moral hazards before participating the self-management project do have some influence on its ex post moral hazards after participating the self-management project. Conclusion: This study concludes that the goal conflict between the agents and the principal certainly exist. The principal tries hard to control the expenditure escalation and keep the financial balance, but the agents have to subsist within limited healthcare resources. Therefore. the agency cost would definitely occur due to the conflicts between both parties. According to the results of the research, some suggestions and related management concepts were proposed at the end of the paper. Crown Copyright (C) 2009 Published by Elsevier Ireland Ltd. All rights reserved.