Quasi-Markets and Contracting for Health Services
ln 1993, the New Zealand health system was radically restructured. Area health boards, which were responsible for both purchasing and providing health services, were replaced by a quasi-market system in which public and private providers compete for public funds via contracts with purchasers. This thesis employs transaction cost economics (TCE) toexamine the theory, the policy and the practice of the emerging quasi-market for healthservices in New Zealand. The main hypothesis which emerges from TCE is thatcontractual arrangements, which differ in their costs, will be aligned with transactions,which differ in their attributes, in a way which minimizes the sum of production andtransaction costs. If services involve specific assets, or are difficult to measure andmonitor, the transaction costs of contracting are likely to be high.The structure of the New Zealand health system prior to and after 1993 aredescribed and analysed. Features of the emerging quasi-market include monopsonisticregional purchasers, a highly concentrated market for hospital services, weak budgetconstraints for CHEs, and a lack of competitive or political neutrality. All of these factorstend to dilute any incentives for efficiency.The TCE framework is used to examine the early contracting experiences andcontractual relationships for four different health services: rest homes, primary healthclinics, surgical services and mental health services. The selection of these four serviceswas based upon a profiling of the characteristics which, according to TCE, are likely toinfluence the cost of transactions. The results support the central argument of the thesis.That is, that the costs of contracting are higher for some services than for others becauseof inherent differences in the attributes of different health services. A blunt policyinstrument which forces a split between the roles of purchaser and provider for all healthservices fails to recognise these differences and may prohibit the development oforganizational structures which might otherwise be selected as means of economizing onthe transaction costs. Efforts must now be made to encourage a more discriminatingapproach to contracting in which a classical or neo-classical style of contracting is retainedfor those services where potential efficiency gains are high and the transaction costs ofcontracting are relatively low while longer-term relational contracts are developed forservices where transaction costs are high.
Year of publication: |
1999
|
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Authors: | Ashton, Toni |
Other Persons: | Basil Sharp (contributor) |
Publisher: |
Auckland |
Saved in:
freely available
Saved in favorites
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