The impact of quasi-markets on processes and factors affecting the costs of contracting

ABSTRACT

The aim of this paper is to ascertain the impact of quasi-markets on contracting processes and factors affecting the costs of contracting in Finnish health care in the specific case of laboratory services. By means of a comparative case analysis, we ascertained the changes in organizational contracting practices and identified the actions affecting the transaction costs of contracting in the case of an autonomous municipal enterprise laboratory compared with the same laboratory as a hierarchically run municipal unit. The research was conducted during the years 2007–2011. The results suggest that introducing quasi-markets into laboratory services increased the cost factors of contracting; and had a negative impact on the laboratories’ willingness to create new market relationships.

KEYWORDS:

• Quasi-markets
• contracts
• transaction costs
• municipal unit
• municipal enterprise

Disclosure statement

No potential conflict of interest was reported by the authors.

Funding

This work was supported by the Academy of Finland, Research Council for Culture and Society. Project title: Comparing Citizens’ Choice and Public Involvement: The Meaning of Public and Non-public Provider especially in Social-and Healthcare [grant number 0134467].

Notes on contributors

Jaana Hurri, MHS, is a doctoral student at University of Eastern Finland. She is member of the International Group for Comparative Studies of Public and Private Management (PubPri Research Group).

Jari Vuori is a professor at University of Eastern Finland. He is currently Head of Health Management Sciences at the Department of Health and Social Management. He is Research Fellow of Warwick Business School (WBS). His research focuses mainly on the differences between public and private organizations and sectors at macro and micro levels. He is head of the International Group for Comparative Studies of Public and Private Management (PubPri Research Group). His research and PubPri research group is mainly funded by the Academy of Finland. His educational and scientific background stems from public management, business administration, and economics. He acts as the Chief-in-Editor of the International Journal of Public and Private Healthcare Management and Economics.

Professor Joyce Liddle BA (Hons) Dunelm, MA, Dunelm, Cert Ed, Dunelm, PhD, Warwick, AcSS, FeRSA. Professor Joyce Liddle joined Aix-Marseille Universite, France as Head of CERGAM, and The Institute of Publique Management and Territoriale Gouvernance in September 2013. Prior to that she was Professor of Public Leadership & Strategy and Head of the Research Center for Leadership and Strategy at the University of Teesside. In 2010, she was conferred as an Academician by the British Academy of Social Sciences (contribution to social sciences), and Fellow of the International Regional Studies Association (contribution to local and regional development). The Durham and Warwick graduate has held posts as Professor of Public Management, Head of the International Center for Public Services Management, Nottingham Business School, NTU, Associate Professor, Director, MPA Programme, University of Nottingham, Director of MA in Master’s, University of Durham, and Director of the MBA Programme, Sunderland University.

Dr Pauline Allen is Reader in Health Services Organisation at the London School of Hygiene and Tropical Medicine. After a career as solicitor (i.e. lawyer) practising company commercial law for some years, she started an academic career by working in the English National Health Service (NHS) in a district public health department and writing a PhD on the legal and economic aspects of the NHS internal market. Her research interests include socio-legal theory, institutional economics and organisational theory, which she uses to investigate governance issues in the NHS and other countries (such as China). She has published widely about the English NHS in journals such as Public Administration, Social Science and Medicine and the Millbank Quarterly.

Notes on contributors

Jaana Hurri, MHS, is a doctoral student at University of Eastern Finland. She is member of the International Group for Comparative Studies of Public and Private Management (PubPri Research Group).

Jari Vuori is a professor at University of Eastern Finland. He is currently Head of Health Management Sciences at the Department of Health and Social Management. He is Research Fellow of Warwick Business School (WBS). His research focuses mainly on the differences between public and private organizations and sectors at macro and micro levels. He is head of the International Group for Comparative Studies of Public and Private Management (PubPri Research Group). His research and PubPri research group is mainly funded by the Academy of Finland. His educational and scientific background stems from public management, business administration, and economics. He acts as the Chief-in-Editor of the International Journal of Public and Private Healthcare Management and Economics.

Professor Joyce Liddle BA (Hons) Dunelm, MA, Dunelm, Cert Ed, Dunelm, PhD, Warwick, AcSS, FeRSA. Professor Joyce Liddle joined Aix-Marseille Universite, France as Head of CERGAM, and The Institute of Publique Management and Territoriale Gouvernance in September 2013. Prior to that she was Professor of Public Leadership & Strategy and Head of the Research Center for Leadership and Strategy at the University of Teesside. In 2010, she was conferred as an Academician by the British Academy of Social Sciences (contribution to social sciences), and Fellow of the International Regional Studies Association (contribution to local and regional development). The Durham and Warwick graduate has held posts as Professor of Public Management, Head of the International Center for Public Services Management, Nottingham Business School, NTU, Associate Professor, Director, MPA Programme, University of Nottingham, Director of MA in Master’s, University of Durham, and Director of the MBA Programme, Sunderland University.

Dr Pauline Allen is Reader in Health Services Organisation at the London School of Hygiene and Tropical Medicine. After a career as solicitor (i.e. lawyer) practising company commercial law for some years, she started an academic career by working in the English National Health Service (NHS) in a district public health department and writing a PhD on the legal and economic aspects of the NHS internal market. Her research interests include socio-legal theory, institutional economics and organisational theory, which she uses to investigate governance issues in the NHS and other countries (such as China). She has published widely about the English NHS in journals such as Public Administration, Social Science and Medicine and the Millbank Quarterly.

Notes

1 The search covered the period 1990–2011. The search term ‘transaction cost*', yielded 6894 abstracts from Scopus and 4968 abstracts from the Web of Science database. Search terms ‘transaction costs*' AND contract* AND health*, yielded 55 abstracts from Scopus and 33 abstracts from the Web of Science database. Some of these articles were duplicates found in both databases. The abstracts were read, but we found no studies on the transaction costs of health care laboratory services.

2 Copy of interview questions is available on request from the published address for correspondence.