ABSTRACT
This chapter offers some economic insights using a principal-agent framework perspective on the new arrangements. The analytical model uncovers some of the key tensions that lie at the heart of clinical governance policies. The chapter examines in little more detail the nature of clinical governance arrangements demanded of healthcare provider organisations such as NHS trusts. An important feature of current health policy is the emphasis on clinical governance - an interlocking framework of policy initiatives and institutions to improve quality and accountability of clinical care. The chapter set outs a simple conceptual framework that can be used to help guide some of the key decisions concerning the development of clinical governance arrangements in the NHS. Principal-agent theory provides one useful way of analysing new clinical governance arrangements, yet it is not without its limitations. Obviously the model represents a considerable oversimplification - not least because, within healthcare, there are multiple and overlapping relationships that could be modelled in this way.
