Abstract

The paper examines the ability of the transaction cost theory to explain the incentives in the health chain. A case study was conducted on CPS, a health insurer in Bogota. CPS moves in the environment of high transaction costs, and uses the hybrid form of governance at outpatient level, which is according to the theory. At hospital level, despite high uncertainty, the market is used as a form of governance, which makes it difficult to relate payments to hospital performance. The paper concludes that the transaction costs theory partially explains the configuration of incentives.

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