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Case Study 13


Case Study 13.1

  • Who is the principal and who is the agent in this scenario?
  • How the agent is better informed than the principal?
  • How do poorly aligned incentives affect the system and individual administrators?
  • What could the system do to convince nursing home administrators to improve safety?
  • Are financial incentives a part of the action plan? Why or why not?
  • How could nursing home administrators signal to the company that they are improving safety?

Case Study 13.2 

  • Why would standardization reduce costs? How could it improve quality?
  • How could the hospital reward physicians for helping standardize prostheses?
  • How would this reward system help align incentives?
  • Are any strategies less likely to cause problems with the Medicare Inspector General?


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