In recent years health services have faced the challenge of increasing
ly complex services and rising costs, thus the consideration of costs
is a key factor in health policy decisions. The introduction of an eco
nomic perspective has sometimes been viewed as conflicting with the et
hics of the health care system, especially at the physician-patient le
vel. This article explores the important role of the physician from th
e ethical and economic perspective in the distribution and allocation
of services. An understanding of economic and ethical principles revea
ls that these two perspectives are compatible with good clinical pract
ice: more efficient health care implies better care for the individual
patient and makes it possible to increase the resources available to
improve care for the population as a whole. Thus, being efficient is a
n ethical objective. The selective elimination of ineffective services
would free resources to care for those who need effective diagnostic
or therapeutic procedures. This requires a better understanding of the
determinants and outcomes of clinical practice, physician motivation,
the appropriate design and application of incentives, and the best us
e of limited resources. The physician can play a key role in increasin
g the efficiency, equity, and quality of the health system without res
tricting the provision of effective services. (C) 1996 Elsevier Scienc
e Ireland Ltd.