Internal Markets and Performance in Swedish Health Care
A separation of provider and purchaser roles - together with performance-based reimbursement - were recently introduced in several county councils, which are the local governments that provide and fund almost all health care in Sweden. These changes have been motivated by efficiency and consumer choice arguments. In this paper we analyze the outcome of the former by studying differences in productive performance for county councils with and without new internal organizations. Performance measures are estimated using data envelopment analysis. Using data for the 26 county councils between 1989 and 1994 we find differences in mean efficiency between the two groups, indicating higher technical efficiency in the group with performance based reimbursement (internal markets). Differences in productivity growth are also found, although the differences are significant in one period only.
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