One party has more knowledge of a subject than another and is able to influence that party's choice. In this case - doctor knows much more than patient and can influence his/ her choice of care.

Paid a fix amount per patient by hospital or HMO.

When physician performs extra tests/ procedures to follow law or ensure he/ she will not be sued.

Physician's services are unbundled and each treatment is paid for separately.

In the context of healthcare econ, patients will use more health care services than they would otherwise because they are covered by their insurance.

Set fee of what physician receives from HMO for each patient assigned to them. Does not matter whether the patient sees physician or not.

OR

Cap on what physician is paid per treatment.

In the context of healthcare, insurance companies without community ratings end up selecting for certain pools of patients. Older, sicker patients tend to buy health insurance, resulting in huge costs for the insurance company and effectively the patients

Physician is paid based on the outcome of his/ her patient.

Studies show that physicians cause patients to purchase more healthcare than they actually need. They can do so due to the asymmetery of information between the patient and the doctor.