Abstract
Abstract: Governments face a formidable combination of principal/agent problems as third party payers for professional services. Health care is an exemplar of these difficulties. This paper develops the concept of discretionary services for acute hospitals from analysis of services with high variations in admission rates. It argues that this concept offers a way of challenging professional discretion and raising new kinds of questions over volumes and quality of services supplied. It illustrates the wider applicability of this concept with two examples: legal aid, and investigation of directors for fraud following bankruptcy.
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