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Physicians and hospitals are pioneering new and more coordinated organizational forms under pressure from market competition. Arms-length "doctor's workshop" relationships are yielding to integrated delivery systems and contractual delivery networks. This article analyzes organizational change in health care through the conceptual lens of institutional economics, defined broadly as including agency theory, transactions cost economics, and the dynamic capabilities view of the firm. These theoretical frameworks highlight three distinct functions of organization under managed care: coordination, governance, and innovation.

OBJECTIVE--Health maintenance organizations (HMOs) have stimulated price competition in California hospital markets since 1983, when the state legislature eliminated barriers to selective contracting by conventional health insurance plans. This study measures the impact of HMO-induced price competition on the rate of inflation in average cost per admission for 298 private, non-HMO hospitals between 1982 and 1988. DATA--HMO market penetration was calculated using discharge abstract data on insurance coverage, ZIP code of residence, and hospital of choice for 3.35 million patients in 1983 and 3.41 million patients in 1988. Data on hospital characteristics were obtained from the American Hospital Association and other sources. -HMO coverage grew from an average of 8.3% of all admissions in local hospital markets in 1983 to 17.0% of all admissions in 1988. The average rate of growth in costs per admission between 1982 and 1988 was 9.4% lower in markets with relatively high HMO penetration compared with markets with relatively low HMO penetration (95% confidence interval, 5.2 to 13.8). Cost savings for these 298 hospitals are estimated at $1.04 billion for 1988. CONCLUSION--Price competition between HMOs and conventional health insurers can significantly reduce hospital cost inflation if legislative barriers to selective contracting are removed. The impact of competition in California was modest, however, when evaluated in terms of the 74.5% average rate of California hospital cost inflation during these years.

The social rate of discount--that is, the way decision makers today evaluate future consequences of collective activity--raises difficult issues of intergenerational justice. When benefits are discounted at the present rate the United States government requires, serious efforts to promote public health over the long term will fail cost-benefit tests. No consensus exists among theorists to establish fair rates; philosophers support discounting with economic arguments that economists reject, while economists no less paradoxically support the concept using philosophical arguments that philosophers disavow. A new emphasis on the role of consumers' and citizens' time preferences, however, will keep open rather than close debates on the social discount rate.

This paper studies the link between occupational health hazards and job security. Consistent with the underlying hypothesis that firms utilizing hazardous technologies tend to employ low-skilled workers who can be discharged easily in case of a downturn in business, the analysis indicates that workers in hazardous positions are more likely to face involuntary job loss than are those in safe positions. These workers may be particularly sensitive to political arguments that efforts to reduce exposure to toxins in the workplace and the general environment are responsible for layoffs and plant closures. The paper discusses policy alternatives that could reduce the impact of health regulations on job security.

Cost-benefit analysis--applying economic reasoning to increasingly complex health policy decisions--continues to be a source of vehement disagreement among its practitioners. re than merely technical issues in measurement and accounting are involved; basic social values embedded in different intellectual traditions are coming into conflict. The "human capital" and "willingness-to-pay" approaches can each aid policy formulation, but neither can substitute for open political process.

'School performance tables', an alphabetical list of secondary schools along with aggregates of their pupils' performances in national tests, have been published in the UK since 1992. Inevitably, the media have responded by publishing ranked 'league tables'. Despite concern over the potentially divisive effect of such tables, the current government has continued to publish this information in the same form. The effect of this information on standards and on the social make-up of the community has been keenly debated. Since there is no control group available that would allow us to investigate this issue directly, we present here a simple mathematical model. Our results indicate that, while random fluctuations from year to year can cause large distortions in the league-table positions, some schools still establish themselves as 'desirable'. To our surprise, we found that 'value-added' tables were no more accurate than tables based on raw exam scores, while a different method of drawing up the tables, in which exam results are averaged over a period of time, appears to give a much more reliable measure of school performance.

This study examined the extent of health plan switching in one large corporation due to changes in employment, compared it with the extent of voluntary switching among continuously employed individuals, and evaluated the risk mix of health plan stayers, voluntary switchers, and involuntary switchers. Of 14,791 workers enrolled in the firm's fee-for-service plan in 1987, only 5,320 remained in 1990. Of the 11,494 employees enrolled in the large health maintenance organization (HMO) and the 7,677 enrolled in the small HMOs in 1987, only 5,299 and 3,026, respectively, remained in their HMOs and insured by the firm in 1990. These large enrollment losses were offset by large enrollment gains from new employees. Health plan leavers were at a lower risk of using medical services than were health plan stayers. The lowest expected annual expenditures were among newly hired health plan joiners.

The U.S. Supreme Court ruling in United Automobile Workers versus Johnson Controls prohibits hiring policies that exclude fertile women from industries posing reproductive health risks to workers and fetuses. Many toxic substances that threaten the developing fetus also pose risks to adult male and female workers. Exclusionary employment policies are socially undesirable for the following reasons: they may lead to worse reproductive outcomes if the indirect effects of lower wages and less adequate health insurance in the alternative available jobs are considered. Second, the effect of such policies could damage the individual woman's overall well-being through its economic impact and her potential loss in autonomy. Third, occupational segregation into less hazardous but lower-paying jobs reinforces gender stereotypes that are restrictive to women. The Supreme Court ruling in the Johnson Controls case reaffirms the importance of the Civil Rights Act as both a shield against unfair treatment for individual women and a commitment to eradicate sexist attitudes and economic inequality throughout society.

This paper analyzes the role of threshold limit values (TLVs) in national air pollution policy during the 1980s, a period in which the Environmental Protection Agency (EPA) sought to delegate to individual states the authority to evaluate and regulate airborne toxic substances. We focus on 20 carcinogens and 11 substances with non-genotoxic health effects that were regulated by local air toxics programs using TLVs. Data from EPA's National Air Toxics Information Clearinghouse indicate that maximum TLV-based Ambient Air Level guidelines (AALs) frequently exceed minimum TLV-based AALs by a factor of greater than 1,000. Cancer potency data from EPA's Integrated Risk Information System suggest significant risks remain at TLV-based AALs. Cancer risks at the median TLV-based AAL exceed 1,000 cases per million exposed persons for cadmium (1,040), nickel and its compounds (1,420), propylene oxide (1,550), coke oven emissions (1,860), benzene (2,500), arsenic and its compounds (7,300), N-nitrosodimethylamine (21,000), asbestos (21,500), and ethylene dibromide (55,000). We also summarize published studies that report non-genotoxic health effects in workers exposed at levels near the TLV for 11 substances whose AALs were based on TLVs. Contrary to the assumption frequently made by state air toxics program, TLVs cannot be taken to represent no observed effect levels (NOELs) for regulatory purposes.

In 1989, after almost two decades of substance-by-substance standard setting, the Occupational Safety and Health Administration (OSHA) promulgated its Air Contaminants Standard, imposing new exposure limits for 376 toxic substances encountered in U.S. industry. In marked contrast to earlier regulations, the Air Contaminants Standard has generated relatively little industry opposition. This paper analyzes the standard in the context of the twenty-year debate over the appropriate role for technological feasibility and economic compliance costs in occupational health policy. The political feasibility of the new standard is traced to OSHA's abandonment of "technology forcing" in favor of reliance on "off-the-shelf" technologies already in use in major firms. While important as an embodiment of OSHA's new "generic" approach to regulation, the Air Contaminants Standard cannot serve as a model for future occupational health policy, due to its reliance on informal, closed-door mechanisms for establishing regulatory priorities and permissible exposure limits.

This paper evaluates the decision by the Occupational Safety and Health Administration (OSHA) to base its Air Contaminants Standard on the threshold limit values (TLVs) of the American Conference of Governmental Industrial Hygienists. Contrary to the claim made by OSHA in promulgating the standard, the TLV list was not the sole available basis for a generic standard covering toxic air contaminants. The National Institute for Occupational Safety and Health (NIOSH) presented data indicating that the TLVs were insufficiently protective for 98 substances. NIOSH Recommended Exposure Limits (RELs) were available for 59 of these substances. The ratio of PEL to REL ranged up to 1,000, with a median of 2.5 and a mean of 71.4. OSHA excluded 42 substances from the standard altogether despite the availability of NIOSH RELs, solely because no TLV had been established.

The use of evidence-based care management processes (CMPs) in physician practice is an important component of delivery-system reform.The authors used data from a 2006-2007 national study of large physician organizations—medical groups and independent practice associations (IPAs) to determine the extent to which organizations use CMPs, and to identify external (market) influences and organizational capabilities associated with CMP use. The study found that physician organizations use about half of recommended CMPs, most commonly disease registries, specially trained patient educators, and performance feedback to physicians. Physician organizations that reported participating in quality improvement programs, having a patient-centered focus, and being owned by a hospital or health maintenance organization used more CMPs. IPAs and very large medical groups used more CMPs than smaller groups. Organizations externally evaluated on quality measures used more CMPs than other organizations. These findings can inform efforts to stimulate the adoption of best practices for chronic illness care.