Institutional Design and the Closure of Public Facilities in Transition Economies

17 Pages Posted: 4 Jan 2003


As part of the reforms of their systems for financing and delivering health care, many transition economies, particularly in central and eastern Europe, have adopted national insurance funds that are institutionally separate from ministries of health. Most of these countries have also grappled with the problem of restructuring the delivery system, especially the need to reduce hospital capacity. Although improving the performance of medical care providers through a shift from passive budgeting to explicitly incentive mechanisms is important, why this change in financial relations between the government and providers could not be implemented simply by reforming the role of health ministries is not obvious. This paper presents an explicit rationale for the separation of powers between the regulator (the ministry of health) and the financing body (the insurance fund), based on the inability of a single agency to commit to closing hospitals.

JEL Classification: L51, P20, P35, I18

Suggested Citation

Jack, William G., Institutional Design and the Closure of Public Facilities in Transition Economies. The Economics of Transition, Vol. 10, pp. 619-635, 2002. Available at SSRN:

William G. Jack (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Register to save articles to
your library


Paper statistics

Abstract Views
PlumX Metrics