PERFORMANCE BASED COMPENSATION IN HEALTH CARE — A SWEDISH EXPERIENCE

In recent years most attempts at reforming health care in Sweden appear to be guided by ideals of decentralization and market orientation. Based on a longitudinal case study of five clinics in a large university hospital this paper questions the general applicability of the market framework in health care. The case story describes how a traditional overall budgeting system was replaced by a performance compensation system in which the clinics were paid a fixed price per unit produced. The new system involved the use of results, balance and funds statements and was also soon to be accompanied by another major reform introducing a purchaser-provider split organization in the county. The story ends by showing how the bold ambitions of establishing strict market like contracting forms fail to materialise and eventually get abandoned.