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Paper info: Achieving Innovation in Healthcare: The Public Quasi-Market Paradox


Achieving Innovation in Healthcare: The Public Quasi-Market Paradox


Sofia Wagrell
Uppsala University
Sofia Wagrell

Place of Publication

The paper was published at the 27th IMP-conference in Glasgow, Scotland in 2011.


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Keywords: Resource interaction, New Public Management, Medical Technology, Innovation, User Adaptation
During the past century people in Western society have grown constantly older, due to the continuous advancement within medicine enabling this advantageous evolvement. Even if it is a positive development of health and well-being among citizens, it is not for free. The public sector in most OECD countries is struggling with budget deficits, not least in the healthcare sector because it is expensive to cure diseases and to keep people alive longer. Furthermore, there are many actors involved in this unremitting battle to “save” healthcare from deficits and help the sector as whole to evolve. Actors vary from policymakers to companies and venture capitalists although the fact still remains that healthcare has to be paid for.
The burgeoning problems of high treatment costs are on the one hand trying to be solved by medical technology companies that constantly provide new high tech treatment methods to the healthcare providers. On the other, politicians are trying to solve the cost problem by rationalizing production of healthcare services through higher efficiency and productivity plans whereby new technology is stated to play a decisive role. However, it is important to acknowledge the many actors working towards the same goal; private business, policy and the healthcare organizations are together struggling to find more economic solutions to cure the ill.
Escalating costs in almost all OECD countries in the 1980’s resulted in more extensive reforms in most countries’ public sectors where market models and business-like structures were used as a template to enhance efficiency. The reform has been conceptually termed New Public Management (NPM). NPM can be described as an umbrella term for the shift from hierarchic structures in public sectors towards a market-oriented view, a shift primarily taking place because of claimed inefficiency in the “older system” (Pollitt et. al 2004, Hood 1995 pp.95, Sahlin-Andersson 2002, Christensen & Lægrid 2002, Almqvist 2006). Irrespective of the many diverse versions of underlying changes that might have caused the shift in the beginning of the 1990’s it can however be concluded most countries encompassed by the NPM reform have undergone all-embracing changes in their public administration over the past 20 years (Pollitt & Bouckaert, 2000). Changes have been profound and have pushed the healthcare system towards expanded administration and rearrangements in national organization of public health services. Competition and slimmed production lines are increasingly important within this type of thinking (Pollit et al. 2004).
This paper brings about the problematic consequences of NPM incentives on new technology adaptation in the healthcare system. While new guidelines for healthcare governance, imposed by the NPM reform, indulges a system where new technology is stated to be central to its incentives – higher efficiency and productivity – it is possible to outline the rather clear
cut ways in which new orders in healthcare organizations actually tend lock out new technology rather than embedding it into the organization. The paper employs a case study of a new medical high-tech device to demonstrate the negative effects of NPM on technology adaptation in healthcare. The case is utilized as a springboard to point to the consequences of NPM in the interface between a high-tech innovation and the established resources in a healthcare organization driven by market efficiency logic.