ABSTRACT
This chapter discusses the implications of alternative forms of organisation for how much funding is available for health care, how resources can be rationed, and what are the institutional structures and incentives to efficiency implicit in alternative systems. A simple framework suggests that incentives to pursue efficiency strengthen as institutions become more private – for example, some literature refers to ‘high-powered incentives’, operating in markets, and ‘low-powered incentives’, operating within hierarchical organisations such as large companies and public agencies. In a market the demands expressed reflect the relative valuation of goods and services by different individuals, but these are effectively weighted by their ability to pay.
