Health Reforms in an Interdependent Environment: Dealing with the Laggards

Abstract

Resource dependency theory holds that organizations dependent on single funders have a strong motivation to behave in a manner which reduces funders‟ power over them. Dependent organizations are required to meet funders‟ accountability demands at the expense of other stakeholders. However, it has also been suggested that, if the funder contracts with a provider for a specialised product (for example health care) the funder-provider relationship may become interdependent instead. By inference this may allow the provider to behave in a manner which is outside funders‟ expectations.

This research considers primary health care reforms and the interplay between state funders and General Practitioner associations established as nonprofit providers. Four case studies are analysed, two of which appear to behave in a manner conducive to the reforms and funders and two of which do not. We hypothesize that the strength of the GP profession is instrumental in these laggards‟ behaviour.

The analysis finds that, while the state funders act in a way that emphasises interdependence with agreeable providers, they act differently towards the laggards. State funders penalise laggards by making increasingly stringent accountability demands and publicly questioning their reputation. These tactics were used, notwithstanding standard contractual arrangements and the specialised product these associations deliver. Therefore, while health contracting can bring interdependent relationships, resource dependent providers will continue to be subject to powerful funders pushing for change through direct and indirect means. Additionally, the specialization of the GPs enabled them to manage their resource dependence without wholesale changes to organizational structures.

Keywords: Resource dependency theory, primary health care reforms, nonprofit health providers, State health funders

JEL Classification: H51, I18, M41