Commercializing German hospital care? Effects of New Public Management and managed care under neoliberal conditions.

VerfasserMosebach, Kai

1 Introduction

External and internal pressures over the past two decades or so have led to hospital sector reorganization in many countries around the world. The basic thrust has been the implementation of market-led governance reforms and business-type restructuring of public hospitals, although on a different scale and scope in each country (McKee/Healy 2002; Preker/Harding 2003; HOPE/DEXIA 2009; Rechel 2009). These market-led reform strategies have given rise to fears of a progressive commercialization of hospital care (Lister 2005; Mackintosh/Koivusalo 2005; Tritter 2010). The aim of this article is to suggest an analytical framework that might explain the ubiquitous market-led reform strategies and to scrutinize widespread claim that commercialization processes impacts negatively on quality of care and equality of access. The empirical range of this contribution is limited, applying the analytical framework to a case study of the German hospital sector. The article is arranged as follows: Firstly, I lay out the theoretical foundations of the analytical framework, which situates the concept of commercialization within the transformation processes of modern statehood and the health care state, both contextualized under neoliberal conditions. On the basis of this framework I construct an ideal model of commercialized health care against which institutional and organizational change in the German hospital sector will be assessed. Secondly, I move straight on to describe institutional and organizational change in the German hospital sector, using widely applied analytical frameworks of health care system regulation and some basic empirical indicators and trends describing hospital care. Thirdly, on the basis of the empirical results of the case study, the last section tries to make sense of the changing governance structures and commercialization processes in German hospital care. The newly evolving market-led governance structure in German hospital care displays a complex institutional blend of different forms of governance, so a dichotomous understanding of governance modes is completely unfounded. Commercialization processes have, however, been restrained so far compared with the ideal model of health care commercialization outlined in the first section. The conclusion, finally, sums up the mixed results of commercialization processes in German hospital care. While regulatory efforts to strengthen economization have been pursued and privatization processes precipitated and broadened, the lack of appropriate data and systematic research still makes it difficult to prove any unfavorable impact of commercialization processes at the level of hospital care delivery.

2 The German Health System, New Public Management and the Commercialization of the Hospital Sector

2.1. Beyond False Dichotomies: Governing the Health Care State under Neoliberal Conditions

The analytical framework of the health care state differs from traditional ways of analyzing health care and health policy in the particular status it affords to statehood and statecraft. Statehood and statecraft are general features of health care policy because state involvement--whatever its institutional shape--plays a decisive role in every health care system, and the institution of the state is different from other governance forms like market or corporatism. Basically, the concept of the health care state entails the idea that interaction between health care institutions and state institutions creates multiple areas of conflict between and within both institutional complexes. As a capitalist state the modern state affects the development of medical technologies, the regulation of the professions and the framework of collective consumption. As a welfare state the modern state influences the way collective consumption is organized and how professions are regulated for treating patients. As a democratic state the modern state is both arena and forum for different material and ideal interests in the health care sector. The political agents of health care institutions and state institutions interact to build a web of policy networks, waiting to be disentangled by health policy analysts (Moran 1992, 1995, 1999, 2000).

In analyzing institutional and organizational change in German hospital care the concept of the health care state serves as a theoretical link from the transformation of statehood in general to regulatory and institutional change in the hospital sector in particular. Statehood in modern capitalist countries has been in a transformation process for years. New Public Management (NPM) has been the most prominent state reform project in the Western hemisphere, affecting both the administration and the provision of public services (Jessop 2002; Pollitt/Bouckaert 2004; Pierson 2007). In Germany, several ideal models and state reform projects developed in the political discourse, ranging from the "Keynesian state" to the recent NPM-like "guarantor state" (Bieling 2009). However, both the transformation of statehood and the political discourse on political models of the state take place within the political and economic context that referring to David Harvey could be termed "the neoliberal condition" (Harvey 2005). Neoliberal conditions frame political decisions and economic processes by, firstly, accepting that the growth of state budgets is restricted through economic globalization processes and, secondly, assuming the superiority of the private sector over the public sector regarding the efficiency and effectiveness of service provision. However, the New Public Management movement insists that the state has a role to play in public service reform (Pollitt/Bouckaert 2004; Pierson 2007; Schedler/Proeller 2007). Although transcending the false dichotomies of market vs. state as asserted in neoliberal economic theory--and therefore providing a much more realistic reform project--the New Public Management movement still adheres to the neoliberal conditions. Further, NPM reforms of statehood under neoliberal conditions might trigger commercialization processes of public services in general and hospital care in particular. (1)

2.2 New Public Management and the Commercialization of Public Services

In Germany, the concept of New Public Management (NPM) was initially associated with the modernization of public administration, in the sense the state's internal structures (Naschold/Bogumil 1998). Here a broader definition of the term is applied, according to which NPM relates to the modernization of the state administration and the public service sector, because especially at the municipal level it is practically impossible to draw a clear line between the state administration and the field of provision of public services (including social services) (Harms/Reichard 2003; Czerwick 2007).

At the heart of the NPM discourse lies the assumption that establishing competition and (quasi-)markets in areas of public service hitherto furnished by local government or the state leads to greater efficiency, effectiveness and economy (Pelizzari 2001: 57-68 Schedler/Proeller 2006: 51-57). Here a distinction is made between non-market, quasi-market and market competition. Non-market competition functions through internal accounting, benchmarking, performance comparisons, and price competition between public administration units with the goal of minimizing costs (Schedler/Proeller 2006: 195-198). Quasi-market competition aims to reduce costs and boost efficiency through service contracts and delegation of responsibility from administrative units to public service providers as well as internal tendering for public services (Schedler/Proeller 2006: 198-200). Market competition differs from both in that private-sector service providers are involved. Market competition uses the instruments of tendering and contracting-out (make-or-buy, outsourcing) to cut costs and provide services cheaply within publicly determined criteria (Schedler/Proeller 2006: 200-203).

This logic says that in order to realize (quasi-)market competition it is necessary to create a potentially competitive market via privatization, thus engendering a structural "pluralism of supply" in the social services sector--if this does not already exist. Privatization and liberalization processes are thus both a theoretical precondition for the application of NPM concepts in practice and a common side-effect. According to the NPM ideal, the process of privatization would cause the state would lose its role as a provider of services and withdraw to the position of a "guarantor state" overseeing the provision, results and quality of quasi-public services now largely supplied privately but still regulated by the state (Schedler/Proeller 2006: 109-112).

Making the provision of public services more customer-and market-orientated presupposes a maximum of decentralization of decision-making on the part of the service providers, as is normally the case with private services. In order to exert financial control over purchasing and tendering--in an environment where state resources are structurally restricted by neoliberal financial and economic policy--the state relies on the instruments of global budgeting and financial controlling (outsourcing, profit centers, cost centers), which in turn presupposes cost transparency and the introduction of cost accounting in the entities involved (Pelizzari 2001: 57-68; Schedler/Proeller 2006: 165-183).

Commercialization of the public sector

In this context the term commercialization generally refers to reform of the public service sector using management and organization concepts taken from the private sector, in other words following the concept of New Public Management. One example would be the commercialization of the German Post Office (Landgraf et al. 1988). Here I use the term in a broader sense than it enjoys in New Public Management theory, understanding commercialization...

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