The reorientation of market-oriented reforms in Swedish health-care

Abstract

Sweden was an important pioneer of market-oriented reform in publicly funded health-care systems. Yet by the mid-1990s the county councils, which fund and manage most health-care, had substantially scaled back reforms based on provider competition while continuing to constrain health budgets. As policy makers faced new issues, they turned increasingly to longer-term and more cooperative contracts to define relations between hospitals and the county councils. Growing regionalization of government and hospital mergers further reconfigured acute care and limited opportunities for competition between hospitals. We seek to explain this reorientation of market-oriented reforms between 1989 and 1996 in terms of shifts in the positions taken by powerful policy actors, and in particular by county council politicians. During this period, elections moved liberal and conservative politicians, who were the most enthusiastic supporters of market-oriented reform, in and out of control of most county governments. Meanwhile many Social Democratic politicians gradually turned from initial support of competitive reform toward opposition. Politicians and county administrators from all parties were particularly concerned about controlling health expenditures during a period of recession. In addition, the public, politicians in the counties and municipalities, and health professionals resisted steps that threatened health sector employment and would have allowed market mechanisms, rather than governments, to determine the prices and distribution of health services. During the years under study Sweden's market-oriented reforms followed a course of development similar to that taken by other management and policy fashions (Abrahamson E. Management fashion, Academy of Management Review 1996;21: 254–85). At first the reforms enjoyed uncritical support by a broad spectrum of stakeholders. Gradually participants in the reform process recognized inherent tensions among the goals of the reform, conflicts between reform programs and fundamental social and political values, unrealistic assumptions about the effects of competition, technical and organizational obstacles to implementation, and threats to interest groups. Since 1998, there have been indications that Sweden may be entering yet another stage of experimentation with market-oriented reform.