'New public management reforms' in the Catalan public health sector, 1985-1995 : institutional choices, transactions costs and policy change
This research uses a transactions costs approach to examine recent developments in the public sector organisational arrangements. It explores the extent to which transactions costs or other factors drive the institutional choices that legislators make about policy implementation. The area of application is the adoption of 'new public management' (NPM) reforms in Catalonia for the governance of the public health care sector in the period from the early 1980s to the mid-1990s. The methodology used combines qualitative and quantitative approaches in the analysis of data from both primary and secondary sources. The primary sources used here include thirty-eight in-depth and semi-structured interviews with key informants, non-published internal reports from major organisations and an annual survey of all health providers carried out by the Department of Health and Social Security of the Catalan government. The secondary sources include official publications and relevant academic journals and books on the subject. The study analyses both the policy formulation process leading up to a particular institutional design and the nature of the further implementation process in the Catalan health sector. First, policy precedents are identified and the resources and interests of the policy elites analysed as a basis for understanding the output of the reform formulation in 1990. Second, the analysis shows how transactions costs considerations shaped the stances taken by legislators and influenced the final institutional design. Third, a number of subsequent implementation short-falls are traced to some efforts at minimising transactions costs which turned out to be incompatible with NPM postulates. The analysis shows that the impact of politics, that is, the repeated interactions among policy elites controlling complementary resources, shape the way in which transactions costs and other considerations are approached in both policy formulation and implementation processes. A central theoretical lesson drawn from this research is that although transactions costs are difficult to measure, they are useful heuristic tools for analysing the rationale driving decision-making processes on institutional design. However, both the theoretical definition of transactions costs and their actual impact on decision making are mediated by power relations, that is, by politics.