In his "fix" of Medicare in the U.S., Hsiao said too much money was spent on patients' visits to specialists.
His solution focused on the use of now-familiar primary care physicians, who are supposed to consider cheaper treatment options before referring patients to the care of more expensive specialists.
Under his system, known as the Resource-Based Relative Value Scale, doctors do not receive premiums for performing extremely technical procedures such as coronary artery bypass surgery or pacemaker insertion.
When such premiums are used, he says, they are often responsible for doctors suggesting more complex procedures before considering simpler alternatives.
Doctors both in America and Hong Kong say Hsiao, trained as an economist, is largely ignorant of the realities of practicing medicine.
They claim that his system only results in overburdened doctors and a lowered standard of care.
Nevertheless, Hsiao maintains that the same standards of efficiency must be applied to medicine as any other industry.
Rather than being cynical about doctors' monetary motivations, Hsiao says that he recognizes the reality that incentives will effect people's behavior--including doctors.