An Institutional Economics of Health Care System Integration

Award Year:
James Robinson
Healthcare Organization
This project results in a conceptual framework for understanding the transformation of the health care delivery system from a fragmented cottage industry to a competitive market of integrated delivery systems. Detailed case studies of the leading health care organizations in California are developed with emphasis placed on the evolving relationships between primary care physicians, specialists, and hospitals. The strengths and weaknesses of alternative methods of coordination for each type of provider and facility including unified ownership, joint ventures, complex contracting, and arms-length purchasing are evaluated. Particular attention is given to financial and non-financial incentives pioneered by integrated delivery systems to promote cost-consciousness and continuous quality improvement by physicians. The study builds on the core concepts of new institutional economics including principal-agent models and transactions cost economics and applies them to the health care sector.