Health insurance, treatment plan, and delegation to altruistic physician

We study delegating a consumer's treatment plan decisions to an altruistic physician. The physician's degree of altruism is his private information. The consumer's illness severity will be learned by the physician, and also will become his private information. Treatments are discrete choices, and can be combined to form treatment plans. We distinguish between two commitment regimes. In the first, the physician can commit to treatment decisions at the time a payment contract is accepted. In the second, the physician cannot commit to treatment decisions at that time, and will wait until he learns about the patient's illness to do so. In the commitment game, the first best is implemented by a single payment contract to all types of altruistic physician. In the noncommitment game, the first best is not achieved. All but the most altruistic physician earn positive profits, and treatment decisions are distorted from the first best.

► We study optimal contract for an altruistic physician facing multiple treatment options.
► The physician is privately informed about her degree of altruism and the consumer's illness loss.
► The first best treatment protocol follows a conservative pattern.
► The first best can be implemented if the physician can commit to a treatment plan at the point of contract acceptance.
► When the physician fails to commit to the predetermined treatment plan, treatment decisions are distorted from the first best.