The organization of public health care : An economic analysis of the Swedish health care system

Abstract: The present study focuses on the organization of public health care in Sweden. The purpose of the thesis is to analyse the institutional arrangements in public health care from the standpoint of the so-called New Institutional Economics. The intention is to provide new insights into how the system is organized and functioning by applying different theories. As the fmancing and delivery arrangements in the Swedish system are largely under the same ownership, both aspects are considered.The study is organized in two parts: one theoretical and one empirical. In the theoretical part the studies of economic organizations by nee-institutional economics are reviewed. The feature of the health care sector and the institutional responses to these factors are also considered. The empirical part shows that health care are mainly produced in-house in the public sector - an integration pattern where transactions of specific as well as non-specific nature are internalized.The findings regarding the internal structure of public health care firms suggest an organization along functional lines rather than on divisions. The special principalagent relationships in public health care can predict the institutional arrangements found in the Swedish health care system.Furthermore the integration of insurances for health care and income compensation and their relation to the production of health care is found to be incomplete. It is argued that there is an interdependence between the two types of insurances and that the lack of integration is likely to cause sub-optimization in the allocation of resources.The study concludes that the new institutional economics can help our understanding of the behaviour and function of public health care. Further research and more empirical testing remains to be done in order to explain the institutional arrangements in public health care.